Minimum Wage III

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     A myth in the ongoing debate about minimum wages is that raising minimum wages will necessarily increase a country's unemployment rate. While there are cases in which a marginal increase in wage rates might impact the operations of a company dramatically enough for the company to change its operations, in most companies, the cost increases of higher wages will tend to affect a company's bottom line without altering its staffing structure. For example, if a particular fast-food location operates at a particular time window with a staff of five people, then five must be the minimum staffing level for that business to achieve optimal results. In the case of a national fast-food chain, especially, these operational questions in general will already have been optimized. Even before rates are raised, managers of these locations have asked themselves whether they can afford to cut jobs and whether they are staffed at optimal levels (in this case, five people). A more specific calculation is needed. In this example, the precise question is how a marginal increase in staffing costs would compare to the decrease in business that would result in decreasing the staff level from five to four and serving food less quickly. The results of this analysis would not necessarily be consistent across industry, or even across markets and companies within an industry.

Which of the following best describes the relationship of the discussion about fast-food restaurants to the passage as a whole?

Review: Minimum Wage III


Explanation

GMAT passages tend to be well-written in the respect that they tend to be free from irrelevant details; most details support the overall idea. In this case, the fast-food restaurant case gives an example that allows the author to describe how companies generally have optimized staffing, and the way in which that staffing is optimized means that they won't necessarily reduce staffing levels if minimum wages are raised. Let's do a pass through these answer choices and see which ones are consistent with that basic idea. Choice (A) sounds about right, especially since "misconception" can refer to the "myth" described by the author. (B) is out because the author doesn't describe a contradiction; as we pointed out in our first read, the author doesn't spend a lot of time describing the myth. (C) is generic but doesn't appear to have an objective flaw. How does it compare to (A)? Looking back, we can see that (A) says that the fast-food example exemplifies a misconception, according to (A). But that's not accurate, because the example is an example of the reality, not the myth. So (A) is out and (C) is in. (E) is out for reasons similar to (A). And there is no comparison of ideas, so (D) is out.

The correct answer is (C).


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