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Recently in City X, developers have stopped buying land, [#permalink]
 03 Sep 2007, 14:37
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Recently in City X, developers have stopped buying land, contractors have found themselves going without work for longer periods, and banks have issued fewer mortgages. There must be fewer new residents moving to City X than there were previously.
Which of the following indicates a flaw in the reasoning above?
A. This year several housing blocks have gone on the market after being held up for months by legal red tape.
B. The average size of a new home has increased significantly over the past several years.
C. Re-sales of condominiums have increased over the past six months.
D. The cost of materials such as lumber and cement has decreased over the past year.
E. Sales of other big-ticket items, such as automobiles and boats, has remained steady over the past year.
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AimHigher
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Re: CR: Fewer new residents [#permalink]
03 Sep 2007, 16:08
AimHigher wrote: Recently in City X, developers have stopped buying land, contractors have found themselves going without work for longer periods, and banks have issued fewer mortgages. There must be fewer new residents moving to City X than there were previously.
Which of the following indicates a flaw in the reasoning above?
A. This year several housing blocks have gone on the market after being held up for months by legal red tape.
B. The average size of a new home has increased significantly over the past several years.
C. Re-sales of condominiums have increased over the past six months.
D. The cost of materials such as lumber and cement has decreased over the past year.
E. Sales of other big-ticket items, such as automobiles and boats, has remained steady over the past year.
I think it's A.
We have to find other reasons why developers are not buying land. A points that out that they are not buying land because several house was held up and they need to sell those first.
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I agree rest of choices aren't great but how does A explain
"banks have issued fewer mortgages"
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AimHigher
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AimHigher wrote: I agree rest of choices aren't great but how does A explain
"banks have issued fewer mortgages"
Well, I look at this as a series of events, one event cause another event. Developer not buying cause contractor out of work, cause bank to issue fewer mortgage...
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Why not B ?
The argument concludes that fewer residents are moving to city X due to a causal effect (contractors, banks etc). Anything that shows that the causal effect does not hold, or in other words more people could have moved into City X than before would weaken the argument - i.e if houses were bigger then more people live in the same number of houses... i.e B.
Anyone else ?
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I went with C.
Resale = More *new* people in the area.
Condos are already built, no contractors or new land dev.
Condos are cheaper, so they would not need mortgages.
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Don't think it's a great question as it is very vague. Looking at the question you expect an answer such as people are not buying because they are renting so they are not taking mortgages.
Looking at the answer choices A and C are close but they do not explain that why did the banks issue fewer mortgages. Condo or an apartment most of the people have to take mortgages.
So I go with E as it somehow tries to say that sales of other big items have remained constant and the general economy and demographics of the place are in good shape.
I am probably only 40-50 % sure on this. But i have doubts about A and C as they explain that contractors do not have to buy new land but what is wrong with the mortgage from the banks.
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