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Developers interested in attracting new business to an area

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Developers interested in attracting new business to an area  [#permalink]

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New post 16 Feb 2012, 19:04
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Question Stats:

91% (01:42) correct 9% (01:52) wrong based on 159 sessions

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Developers interested in attracting new business to an area should invest initial capital in construction of buildings appropriate to each site. Although purchase prices will be slightly higher, the sites will be more attractive because potential buyers will not have to spend money out of pocket to build.

Which of the following, if true, would most undermine the soundness of the suggestion that developers construct new buildings before inviting potential buyers?

(A) Construction costs in the area most attractive to new business are higher than in other parts of the city.

(B) Developers are aware of the types of business wishing to move into the area and concentrate on designing appropriate buildings.

(C) If developers do not sell every lot with a building on it, they will still be able to rent the space and regain some of their investment.

(D) Zoning regulations in some areas require that specific building materials be used, which could result in unforeseen costs for developers.

(E) Potential buyers will likely want to design their own buildings, making it unlikely that they will purchase a site on which there is an existing structure.
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Re: Developers interested in attracting new business to an area  [#permalink]

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New post 16 Feb 2012, 21:11
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(A): The construction costs are irrelevant. Incorrect.
(B): This does not change anything. Incorrect.
(C): It is not clear if the investment that they regain will be worth more than what they will get if they sell plots with appropriately designed buildings. Incorrect.
(D): Even if unforeseen costs are there, it is still possible to make profits by selling plots with appropriately designed buildings. This is similar to (A) and hence incorrect.
(E): CORRECT. If potential buyers will still want to design their own buildings, there is wastage in investing capital to design appropriate buildings. This point, if true, will undermine the logic of the suggestion.
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Re: Developers interested in attracting new business to an area  [#permalink]

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New post 24 Nov 2019, 17:59
Bumping for further discussion
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Developers interested in attracting new business to an area  [#permalink]

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New post 25 Nov 2019, 13:46
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I feel that I have seen a similar question in one of my official tests.

One should carefully break down the question. The question asks to Weaken the argument. Specifically, we are told that developers (owners of new buildings) should build buildings before inviting potential buyers.

So, the plan is (1) - build and (2) - attract tenants. The developers say that even though the price will be a bit higher than the price to build your own building. Well, what can weaken their reasoning? The easiest thing that comes in mind is that tenants may not want to buy for some reason. Maybe the price is too high. Maybe the location is bad. Maybe the taxes in that area are too high. Maybe there is lots of crime. There could be some other reasons, too. Let's look at the answer choices:

Quote:
(A) Construction costs in the area most attractive to new business are higher than in other parts of the city.

This is a tempting option, but if the construction costs are high, then they will be high for both developers and tenants, if the latter ones decide to build their own buildings.

Quote:
(B) Developers are aware of the types of business wishing to move into the area and concentrate on designing appropriate buildings.

This option strengthens the argument.

Quote:
(C) If developers do not sell every lot with a building on it, they will still be able to rent the space and regain some of their investment.

If anything, this option strengthens the argument.

Quote:
(D) Zoning regulations in some areas require that specific building materials be used, which could result in unforeseen costs for developers.

This option is similar to (A).

Quote:
(E) Potential buyers will likely want to design their own buildings, making it unlikely that they will purchase a site on which there is an existing structure.

Aha, if potential buyers are fancy and want to dictate their own rules (e.g. design), they will not buy anything from developers. Buyers will want to build their own buildings.
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Developers interested in attracting new business to an area   [#permalink] 25 Nov 2019, 13:46
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