In the past year, there has been a large drop in the number

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In the past year, there has been a large drop in the number [#permalink]

02 Aug 2008, 05:06

In the past year, there has been a large drop in the number of new cars sold, due to harsh economic conditions in the marketplace and high taxes. At the same time, the average price paid for a new car has risen dramatically.

Which of the following, if true, best explains the increase in the average price of a new car?

(A) The price of used cars has climbed steadily over the past ten years.

(B) There will be a tax reduction later in the year which is expected to aid moderate and low income families.

(C) The market for expensive car has been unaffected by the current economic conditions.

(D) Economic conditions are expected to get significantly worse before the end of the year.

(E) Low demand for trucks and vans has led to lower production in the factories.

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Re: RC-cars [#permalink]

02 Aug 2008, 10:01

IMO C

Average price of cars (A) = Price of New normal cars (x) + Price New luxury cars (y) / no. of cars sold (n). If n drops and Y has remained steady then A will rise.

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Re: RC-cars [#permalink]

02 Aug 2008, 13:00

nmohindru wrote:

IMO C.

last to last year: more economic cars sold. more cars with an average price of economic car (say 15k)
last year: less cars sold. but all were expensive cars with an average price of (say 150k)

So even though less cars were sold... the average price was very high.

Re: RC-cars [#permalink] 02 Aug 2008, 13:00

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In the past year, there has been a large drop in the number

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