Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chainandrsquo;s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer?

Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity

Open App

GMAT Exam > GMAT Questions > Thousands of people work at G. Handys, an ine...

Join the Discussion on the App

Thousands of people work at G. Handy's, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chain's labor costs, its profits also rose substantially.

Which of the following, if true, most helps to resolve the apparent paradox?

a)
Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.
b)
People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.
c)
Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.
d)
The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.
e)
Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.

Correct answer is option 'B'. Can you explain this answer?

FREE This question is part of

Test: Resolve a Paradox

Attempt Test

Attempt this Test

Most Upvoted Answer

Thousands of people work at G. Handys, an inexpensive fast-food restau...

A. Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.
This option suggests that most of the employee compensation goes to non-managerial positions. However, it does not directly explain why the profits increased substantially despite the higher labor costs.

B. People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.
This option implies that the increase in minimum wage has led to an increase in disposable income for the restaurant's customer base. As a result, more customers can afford to eat at G. Handy's, which explains the rise in profits.

C. Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.
If this option is true, it suggests that the increase in profits can be attributed to factors other than the rise in labor costs. This would explain the apparent paradox.

D. The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.
While this option addresses the increase in wages for managerial employees, it does not directly resolve the paradox. It does not explain why the overall profits of the restaurant chain rose substantially despite the higher labor costs.

E. Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.
This option highlights the fact that the majority of the staff, including cashiers and cooks, are paid minimum wage. However, it does not directly address the apparent paradox of increased profits despite higher labor costs.

Among the given options, the one that most helps to resolve the apparent paradox is option B. If the majority of G. Handy's customer base consists of people who earn minimum wage or rely on the earnings of others who do, the increase in minimum wage would lead to higher disposable income for these individuals. This, in turn, would result in more customers patronizing the restaurant chain, ultimately explaining the substantial rise in profits despite the increase in labor costs.

Answered by Talent Skill Learning · View profile

Attention GMAT Students!

To make sure you are not studying endlessly, EduRev has designed GMAT study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in GMAT.

GMAT Focus Edition Mock Test Series 2024

Quantitative for GMAT

Crash Course for GMAT

Data Insights for GMAT

View all answers Start learning for free

< Previous Question Next Question >

Explore Courses for GMAT exam

Similar GMAT Doubts

A restaurant that comes up with an innovative dish can normally increase its profits by capitalizing on the novelty of the dish. Since recipes can be easily replicated, the restaurant with a new dish advertises it aggressively to attract customers while the novelty factor can still be used as a selling point. But aggressive advertising generates a fear of losing customers in the competitors and gives them a strong incentive to quickly replicate the new dish. Therefore, the strategy to maximize overall profit from a new dish is to advertise it selectively.Which of the following, if true, strengthens the suggestion given by the author?

View answer

Directions: Each of these GMAT critical reasoning practice questions are based on a short argument, a set of statements, or a plan of action. For each practice question, select the best answer of the choices given.Eatco, a restaurant equipment supply firm, has decided to pay all of its salespeople on a commission structure rather than the salary structure previously used at the company. Eatco executives have assured the sales staff that, with the busy holiday season coming up, the commission structure will either maintain or increase the salespeople’s current pay.Q.Which of the following could cause the assurances given by Eatco executives to the sales staff to be untrue?

View answer

The restaurant business wastes more energy than any other industry in the United States. Nearly 80 percent of the $10 billion spent on energy by the restaurant industry each year is squandered by the use of inefficient equipment. At the same time, approximately 70 percent of restaurants in the United States are small businesses that are usually too cash poor to invest in energy-efficient technology.Which of the following statements draws the most reliable conclusion from the information above

View answer

An entrepreneur who is planning to set up a restaurant estimates that the monthly costs of running the restaurant will be given by the formula C = 15000 + 2000n + 5m, where C is in dollars, n is the number of employees at the restaurant and m is the number of orders received in the month. He plans to start the restaurant with only 2 employees and to hire 1 new employee each month. He estimates that the average order value at his restaurant will be $50 and that the number of orders per month will increase by 10% month on month. If the estimated number of orders the restaurant receives in the first month of its existence is 1000, then as per this model, after how many months of operation will the restaurant first achieve a profit margin of 20% or more?

View answer

French cuisine is highly regarded all over the world. Yet in Paris there are more American restaurants selling burgers and fries (which many people now class as junk foo d) than there are in any other European capital city. Obviously the French are very fond of junk food, and are not too proud to eat it.Which of the following, if true, would most weaken the authors contention?

View answer

Top Courses for GMATView all

GMAT Focus Edition Mock Test Series 2024

Quantitative for GMAT

Crash Course for GMAT

Data Insights for GMAT

100 RCs for GMAT

Top Courses for GMAT

View all

Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer?

Share with a Friend

Answer this doubt

Question Description
Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer?.

Solutions for Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT. Download more important topics, notes, lectures and mock test series for GMAT Exam by signing up for free.

Here you can find the meaning of Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Thousands of people work at G. Handys, an inexpensive fast-food restaurant chain that pays most of its employees minimum wage. Even though new laws forced an increase in the minimum wage, and thus substantially raised the restaurant chains labor costs, its profits also rose substantially.Which of the following, if true, most helps to resolve the apparent paradox?a)Only a very small part of the 70 percent of operating expenses paid by the restaurant chain for employee compensation goes to pay managers.b)People who earn minimum wage, or who rely on the earnings of others who do, comprise most of the restaurant chain’s customer base.c)Other expenses of the restaurant chain rose dramatically after the wage hike, for reasons unrelated to the minimum wage raise.d)The restaurant chain decided to increase wages for managerial employees who were making slightly more than minimum wage simultaneously with the minimum wage increase.e)Cashiers and cooks, who are usually paid minimum wage, comprise most of the staff at the restaurant chain.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice GMAT tests.

Explore Courses for GMAT exam