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

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

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03 Sep 2008, 03:11
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100% (01:27) correct 0% (00:00) wrong based on 6 sessions

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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: Average price of a new car [#permalink]

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03 Sep 2008, 03:30
Nihit wrote:
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.

ANS should be C. It's talking on average! So, number down but avg. up. C only clears the discrepancy...
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Re: Average price of a new car [#permalink]

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03 Sep 2008, 08:56
Nihit wrote:
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.

Used cars is out of scope.

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

If there is a TR, there should be an increase in the number of cars sold.

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

If people are buying the expensive cars in same numbers, that means low end cars are bought less, which drives the avg price up.
Keeper

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

Ok. So what?? Possibly the total number of cars bought will come down. No explanation for discrepancy.

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

T & V?? We dont care. Only cars.

My pick is C
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Re: Average price of a new car [#permalink]

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03 Sep 2008, 08:59
IMO C
the expensive car market is unaffected ie average new car is costing high in spite of less cars sold.
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Re: Average price of a new car [#permalink]

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31 Mar 2009, 14:30
Nihit wrote:
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.

Can a real GMAT question be similar to this?

What if "a large drop in the number of new cars sold" relates to solely expensive cars?. In this case, average price should have fallen. Or am I approaching the question wrongly?
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Re: Average price of a new car [#permalink]

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31 Mar 2009, 16:42
This is not a well constructed GMAT CR question. While option C works best .. it does not satisfactorily explain how the average price of a car can increase. The option indicates that the market for expensive cars has remained unchanged, but nowhere - either in the argument or in the answer choices there is a mention that the market for less expensive cars has taken a hit or has improved. The argument says that all new car sales have taken a hit because of economic conditions.

Also what is defined as expensive ? When the argument concludes that the average price of 'a' car has increased, the answer choices do not correlate to the price of 'a' car but cars and that too expensive cars in general.

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Re: Average price of a new car [#permalink]

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31 Mar 2009, 23:31

This is from CR1000.
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Re: Average price of a new car [#permalink]

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02 Apr 2009, 18:34
[quote="Nihit"]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. - no effect on price of new car

B. There will be a tax reduction later in the year which is expected to aid moderate and low income families. - who know where they will spend and how it affects average price with small car for small people ?

C. The market for expensive car has been unaffected by the current economic conditions. - it affects directly to average prices of newcar

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. - it actually weakens,
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Re: Average price of a new car [#permalink]

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03 Apr 2009, 01:21
My pick is C too.

Since less of New cars are sold but the expensive new cars havent been affected, it means they undoubtedly contribute to a larger proportion towards the average price of the new cars that are sold.

Nihit..OA?
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Re: Average price of a new car [#permalink]

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03 Apr 2009, 08:41
I also think it is C
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Re: Average price of a new car [#permalink]

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08 Apr 2009, 08:03
1
KUDOS
Contrary to what was said above, this is a well constructed question. (C) is clearly correct. The question states that the total number of new cars sold (NEW cars, not "expensive" cars) has gone down. We have to explain how the AVERAGE price could go up at the same time. (C) says that the market for EXPENSIVE cars has not changed, which means that the same number of EXPENSIVE cars has been sold at the same price.

If the total number of sales goes down while the number and price of expensive cars does not, this not only makes it possible, but logically necessary, that the average price will go up.
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Re: Average price of a new car [#permalink]

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10 Apr 2009, 10:58
Something seems to be off in the way this question is constructed.
However, IMO the best answer the way it reads now is E, not C. It cannot be C, because the stem clearly indicates that the price rose, and C indicates no change.

Again, it should be E.
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Re: Average price of a new car [#permalink]

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11 Apr 2009, 05:30
grumpyoldman wrote:
Contrary to what was said above, this is a well constructed question. (C) is clearly correct. The question states that the total number of new cars sold (NEW cars, not "expensive" cars) has gone down. We have to explain how the AVERAGE price could go up at the same time. (C) says that the market for EXPENSIVE cars has not changed, which means that the same number of EXPENSIVE cars has been sold at the same price.

If the total number of sales goes down while the number and price of expensive cars does not, this not only makes it possible, but logically necessary, that the average price will go up.

Thank you for clarifying. I now understand that C is a correct answer.
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Re: Average price of a new car [#permalink]

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12 Apr 2009, 02:16
I opt for C
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Re: Average price of a new car [#permalink]

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12 Apr 2009, 08:24
peraspera wrote:
Something seems to be off in the way this question is constructed.
However, IMO the best answer the way it reads now is E, not C. It cannot be C, because the stem clearly indicates that the price rose, and C indicates no change.

Again, it should be E.

On the GMAT, you have to watch carefully for critical differences between the words in the conclusion and in the evidence, or between the words in the stimulus and in the answer. In this case, the stimulus is saying that the average price of ALL new cars went up, and it says nothing about the NUMBER sold. Answer choice (C) refers only to EXPENSIVE cars, not to ALL new cars. Saying there was no change in the market for EXPENSIVE cars does NOT mean that there was no change in the average price for ALL new cars.
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Re: Average price of a new car [#permalink]

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12 Apr 2009, 12:09
I can clearly see now that the answer should be C - thanks for this problem.
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Re: Average price of a new car [#permalink]

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12 Apr 2009, 17:57
I would also go with C as that is the choice looking relevant here.
Expensive cars are driving the price of other new cars and hence this resolves the apparent paradox.
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Re: Average price of a new car [#permalink]

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28 Oct 2009, 08:40
grumpyoldman wrote:
Contrary to what was said above, this is a well constructed question. (C) is clearly correct. The question states that the total number of new cars sold (NEW cars, not "expensive" cars) has gone down. We have to explain how the AVERAGE price could go up at the same time. (C) says that the market for EXPENSIVE cars has not changed, which means that the same number of EXPENSIVE cars has been sold at the same price.

If the total number of sales goes down while the number and price of expensive cars does not, this not only makes it possible, but logically necessary, that the average price will go up.

Tks, good explanation
Re: Average price of a new car   [#permalink] 28 Oct 2009, 08:40
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