With problems in the mortgage industry and a declining : GMAT Critical Reasoning (CR)
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# With problems in the mortgage industry and a declining

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Manager
Joined: 09 Apr 2013
Posts: 152
Location: India
WE: Supply Chain Management (Consulting)
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With problems in the mortgage industry and a declining [#permalink]

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19 Dec 2013, 10:45
2
KUDOS
6
This post was
BOOKMARKED
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Difficulty:

45% (medium)

Question Stats:

62% (02:22) correct 38% (01:46) wrong based on 382 sessions

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With problems in the mortgage industry and a declining economy, overall housing sales are down by more than 40% percent. Online real estate broker sites, however, have seen increased traffic and revenues are up by more than 10 percent in the slumping real estate market.

Each of the following, if true, helps to explain the improved performance of online real estate brokers during the housing slump EXCEPT:

A) During a slump in the housing market, buyers are more likely to shop online broker sites in search of the best possible price.

B) When the housing market is strong, both buyers and sellers rely on traditional real estate brokers in an order to buy or sell property more quickly.

C) The cost of selling a property with an online broker is a fraction of the cost of using a traditional real estate broker.

D) Online brokers devote more advertising resources to attracting customers during a downturn in the real estate market than do traditional retailers.

E) Customers of online brokers, but not customers of traditional brokers, can control the cost of listing and selling their house by choosing from a number of available packages and options.

Please post your opinions on the best ways to tackle these type of questions with minimum time consumption.
[Reveal] Spoiler: OA

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Re: With problems in the mortgage industry and a declining [#permalink]

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20 Dec 2013, 01:42
5
KUDOS
Hi mate. You deserve a kudo. Very impressive question.

Three important notes:

(1) The logic of the question, which I believe is more of LSAT than of GMAT, is:
A ==> B
Not A ==> Not B .

This is WRONG conclusion.
For example:
I love wearing suit in formal events. This does NOT mean I don’t love wearing suit in non-formal events.

(2) This is “except” question. Be aware!

(3) In paradox questions, there is NO conclusion, just facts.

ANALYZE THE STIMULUS:

Fact: With problems in the mortgage industry and a declining economy, overall housing sales are down by more than 40% percent.
Fact: Online real estate broker sites, however, have seen increased traffic and revenues are up by more than 10 percent in the slumping real estate market.

Question: Each of the following, if true, helps to explain the improved performance of online real estate brokers during the housing slump EXCEPT:

A) During a slump in the housing market, buyers are more likely to shop online broker sites in search of the best possible price.
Wrong. A can explain the paradox. If buyers are more likely to shop online broker ==> Online real estate brokers’ revenue increase.

B) When the housing market is strong, both buyers and sellers rely on traditional real estate brokers in an order to buy or sell property more quickly.
Correct. That people prefer tradition brokers in strong market does NOT mean people prefer non-traditional brokers, says online brokers, in weak market. This is WRONG logic and does not help to explain the paradox.

C) The cost of selling a property with an online broker is a fraction of the cost of using a traditional real estate broker.
Wrong. Clearly C explains why online brokers’ revenue increase.

D) Online brokers devote more advertising resources to attracting customers during a downturn in the real estate market than do traditional retailers.
Wrong. Clearly D explains why online brokers’ revenue increase.

E) Customers of online brokers, but not customers of traditional brokers, can control the cost of listing and selling their house by choosing from a number of available packages and options.
Wrong. Same as in A. If customers prefer online brokers for their conveniences, online brokers’ revenue will increase.

Hope it helps a bit.
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Manager
Joined: 09 Apr 2013
Posts: 152
Location: India
WE: Supply Chain Management (Consulting)
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Kudos [?]: 94 [0], given: 24

Re: With problems in the mortgage industry and a declining [#permalink]

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20 Dec 2013, 02:25
Hi pqhai,

That was a very helpful explanation. I am struggling with timing issues especially when I face these type of "EXCPET" question. My main aim behind posting this question is to get some techniques to improve timing along with accuracy. It took me closer to 3:00 minutes to get the right answer.

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Re: With problems in the mortgage industry and a declining [#permalink]

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06 Mar 2014, 00:44
Why does the option D says tradition retailers? Just to confuse you?
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Re: With problems in the mortgage industry and a declining [#permalink]

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06 Mar 2014, 10:22
b2bt wrote:
Why does the option D says tradition retailers? Just to confuse you?

Hey B2bt,

I hope I'm getting your question right, shout if not:

'traditional retailer' is basically a term used for 'bricks and mortar' business, and is used to contrast with online retailers.

So in this case it is used to allow the author to set up a comparison between online and non online ('traditional).

Hope that helps

James
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With problems in the mortgage industry and a declining [#permalink]

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27 Aug 2014, 03:27
Hi ,

I'm reopening this discussion. Need help to understand why D helps explain the paradox here.

D just says that Online retailers spend more resources on attracting new customers that the traditional retailers. So what??
This does not guarantee that those attracted would necessarily convert into sales.
I do agree B is correct answer but I'm just analyzing the options here.
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Re: With problems in the mortgage industry and a declining [#permalink]

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18 Jun 2015, 03:25
Yeahh i also thought the same...
souvik101990
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Re: With problems in the mortgage industry and a declining [#permalink]

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18 Jun 2015, 07:24
Glad this got bumped. Shree, you're clear on A, C and E as incorrect?
Imagine you're in a Board meeting. You're batting around reasons for the good news. The Directors quickly agree A/C/E are valid suppositions (not "guarantees"). You then propose D as a possible explanation, nothing more; your colleagues all agree - seems reasonable, more spend usually = more revenue or traffic. Now a Director speaks up and says, "Well, we know there's a boom for trad brokers in good times . . . " and his neighbor finishes for him: "Yes, but what about the other side: online activity in bad times?" So B, as conjecture, as stated, is not helpful.
It's a salty question!
"revenues are up by more than 10 percent in the slumping real estate market" is, to me, a bit of poor english and distracting thereby.
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Re: With problems in the mortgage industry and a declining [#permalink]

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09 Oct 2016, 10:37
eliminated all except for B and E.
E doesn't work out since the seller has more control on the price - thus, more will use online brokers...

B stands.
Re: With problems in the mortgage industry and a declining   [#permalink] 09 Oct 2016, 10:37
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