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07 Oct 2019, 05:17
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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
5%
(low)
Question Stats:
83% (01:14) correct
17%
(01:18)
wrong
based on 230
sessions
History
Date
Time
Result
Not Attempted Yet
A large manufacturing company pays most of its many factory workers minimum wage. Following a new law requiring increased minimum wage rates, the company's operating costs rose significantly. However, since the wage increase, the company's profits have risen dramatically.
Which of the following, if true, would help resolve this apparent paradox?
A. When the minimum wage increase took effect, company managers' salaries were also raised.
B. After the wage increase, payroll accounted for a higher percentage of operating costs than previously.
C. The company's customer base is made up of other manufacturers whose employees also earn minimum wage.
D. The company faced stiff competition from a new competitor in the period immediately following the wage increase.
E. As a result of the wage increase, the factory workers' productivity rose dramatically, resulting in lower costs-per-item produced.
Which of the following, if true, would help resolve this apparent paradox?
A. When the minimum wage increase took effect, company managers' salaries were also raised.
B. After the wage increase, payroll accounted for a higher percentage of operating costs than previously.
C. The company's customer base is made up of other manufacturers whose employees also earn minimum wage.
D. The company faced stiff competition from a new competitor in the period immediately following the wage increase.
E. As a result of the wage increase, the factory workers' productivity rose dramatically, resulting in lower costs-per-item produced.
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12 Oct 2019, 05:14
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SajjadAhmad
We're looking for an option that explains why company's profits rose significantly when its operating costs went up dramatically.
Option E solves this paradox by stating that profits went up because major increase in labor productivity because of wage increase led to lower costs/item produced.
13 Oct 2019, 09:16
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The correct answer should solve the discrepancy consisting of the dramatic increase in company's profits despite the increase operating costs. Therefore, a correct answer should either provide us information about an even more dramatic increase in revenues or decrease in other costs.
A. When the minimum wage increase took effect, company managers' salaries were also raised. This info only tells us that the company's costs have only increased further and therefore makes the argument even more discrepant.
B. After the wage increase, payroll accounted for a higher percentage of operating costs than previously. This information is irrelevant and almost tautological, if we assume that the other components of operating costs remained unchanged.
C. The company's customer base is made up of other manufacturers whose employees also earn minimum wage. Another irrelevant answer choice. While this answer choice may lead a few to assume that these other manufacturers will purchase more toys, nothing guarantees this fact let alone that these other manufacturers benefited from the minimum wage increase newly established law. Remember, in paradox CR questions, we look for airtight evidence-based answers, not assumptions.
D. The company faced stiff competition from a new competitor in the period immediately following the wage increase. Just like answer choice A, the statement only makes the argument more discrepant.
E. As a result of the wage increase, the factory workers' productivity rose dramatically, resulting in lower costs-per-item produced. Bingo. Other costs have decreased. Therefore, this statement can provide a reasonable explanation for the increase in profits.
A. When the minimum wage increase took effect, company managers' salaries were also raised. This info only tells us that the company's costs have only increased further and therefore makes the argument even more discrepant.
B. After the wage increase, payroll accounted for a higher percentage of operating costs than previously. This information is irrelevant and almost tautological, if we assume that the other components of operating costs remained unchanged.
C. The company's customer base is made up of other manufacturers whose employees also earn minimum wage. Another irrelevant answer choice. While this answer choice may lead a few to assume that these other manufacturers will purchase more toys, nothing guarantees this fact let alone that these other manufacturers benefited from the minimum wage increase newly established law. Remember, in paradox CR questions, we look for airtight evidence-based answers, not assumptions.
D. The company faced stiff competition from a new competitor in the period immediately following the wage increase. Just like answer choice A, the statement only makes the argument more discrepant.
E. As a result of the wage increase, the factory workers' productivity rose dramatically, resulting in lower costs-per-item produced. Bingo. Other costs have decreased. Therefore, this statement can provide a reasonable explanation for the increase in profits.
