A discount retailer of basic household necessities employs thousands of people and pays most of them at the minimum wage rate. Yet following a federally mandated increase of the minimum wage rate that increased the retailer’s operating costs considerably, the retailer’s profits increased markedly.
Which of the following, if true, most helps to resolve the apparent paradox?

Question

Examsnet · Accepted Answer

Correct Answer is :  The retailer’s customer base is made up primarily of people who earn, or who depend on the earnings of others who earn, the minimum wage.

GMAT Verbal Reasoning Practice Test 6