PrepTest 129

Correct. Argument or Facts:
Facts

Question Type:
Paradox

Stimulus Summary:
Minimum wage cutting in to profits is often met by firing people
A recent minimum wage increase in the fast-food industry (where minimum wage is common) didn't result in people getting fired

Answer Anticipation:
The stimulus notes what is "often" the case when a minimum wage increase starts cutting into profits—people lose their jobs. However, it then highlights a specific situation where that trend didn't pan out.

Since this situation breaks out of the general pattern discussed in the opening statement, we should look for an answer that highlights something different about this situation which resulted in the expected course of action being skipped. Since the stimulus notes that the driving force behind the firings was the increased minimum wage eating into profits, the answer will likely address something about the recent increase in the minimum wage which saved the companies as much money as the increased salaries cost them.

Answer Explanation:
This answer highlights how the noted change to the minimum wage saved the companies money in a way that balanced out the increased cost of wages—it lowered turnover and thus recruiting costs.

Key Takeaway:
When a change doesn't result in the expected outcome, it's usually because it had an unexpected effect. In Paradox questions, such situations usually highlight that unexpected effect that explains the unexpected outcome as the correct answer.

Incorrect. The stimulus raises a situation where people didn't lose their jobs after a minimum wage hike, so this answer about when they do is out of scope.

Incorrect. The stimulus notes that companies often respond to a minimum wage hike by firing people, but it also brings up a recent situation where the fast food industry didn't respond to such an increase with firings. As such, this answer choice saying that the fast food industry reacts similarly to other companies to a wage increase makes the paradox worse—why didn't they in this case?

Incorrect. While some weren't, the stimulus already noted that most were making minimum wage, so costs would have still gone up for these companies, suggesting there should have been firings.

Incorrect. This answer removes one potential way that the fast food companies could have seen an offset to the costs—they sold more food since more people could afford it. By ruling out a way that the companies could recoup their costs and thus avoid firing people, this answer makes the paradox worse.