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Contrary to a former estimation made by the head of the tourism industry of Country X, there was no rise in the number of tourists or in the average sum of money spent by each tourist in the past year. There was, however, a steep increase of almost 20 percent in profits from the tourist industry in that time span.
Which of the following statements, if true, help to explain the rise in profits?
This answer choice would have been correct if we hadn't known that the average revenues remained the same.
We know from the first sentence that the estimates for last year's tourist industry were wrong (there was no rise).
We know that the amount of tourists which actually entered Country X remained the same, so the fact that it was easier for tourists to enter the country had no influence over the overall profits of the industry.
If the employers had to take more money out of their pockets, the expenses in the industry would rise and the profits would drop. This answer choice does not resolve the paradox, it emphasizes it.
A steep decrease in salaries lowers the expenses, a fact which goes a long way to help explain how even though the revenues stayed the same, the overall profits (=revenues-costs) grew by almost 20%.