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In January there was a large drop in the number of new

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Re: In January there was a large drop in the number of new [#permalink]

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New post 18 Apr 2012, 14:04
IMO A
for me A and E were tempting!
Reason for A:
If the sale of expensive houses is not affected then the avg price of the new houses sold will be high as mostly the higher priced houses r getting sold!

Reason for E:
Although, E sounded good too, but even if the rates are expected to increase then also it does not mean that the prices of the new houses sold will increase. Also, nothing can be concluded about the average price of the new houses sold.

Hence, i Chose A
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Re: In January there was a large drop in the number of new [#permalink]

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New post 27 Dec 2013, 17:58
SudiptoGmat wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.
(B) Labor agreements of builders with construction unions are not due to expire until the next January.
(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.
(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.
(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


I guess A but even then is not very clear because in no part of the argument does it mention the share of higher priced houses on the overall market. Mind you, if these were only 1% of the total market then it would not cause average prices of new houses to increase sharply

You get the point

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Re: In January there was a large drop in the number of new [#permalink]

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New post 28 Dec 2013, 19:57
jlgdr wrote:
SudiptoGmat wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.
(B) Labor agreements of builders with construction unions are not due to expire until the next January.
(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.
(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.
(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


I guess A but even then is not very clear because in no part of the argument does it mention the share of higher priced houses on the overall market. Mind you, if these were only 1% of the total market then it would not cause average prices of new houses to increase sharply

You get the point

Cheers
J :)


Hello jlgdr.

My opinion, the wording is a bit tricky. Let read the last sentence one more time.
"This large sales drop was accompanied by a sharp rise in the average price of new houses sold"

The argument just says that the average price of houses that were SOLD increased sharply. On the other hand, the argument provides facts of TOTAL new house market, but the last sentence ONLY focus on A SUB-DIVISION of the market - new houses SOLD. Be aware, the argument does not say the average price of ALL new houses increased sharply. Readers may be fallen in trap by thinking that the argument said that the average price of new houses in general had increased sharply.

Back to option A.
Option A: Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.
A only focuses on houses that were sold. Because their price were not affected by the sale drop, their average price could increase. Clearly, the paradox is resolved.

Your example "if these were only 1% of the total market then ......" does not help to evaluate the argument. It does not matter 1% or 50%, because the argument does not talk about average price of total new houses market but a small segment - new houses sold.

Hope it's clear.
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Re: In January there was a large drop in the number of new [#permalink]

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New post 29 Dec 2013, 01:01
1
1. PEOPLE ARE NOT BUYING HOUSES AS THEY WANT TO SEE FURTHER FALL IN INTEREST RATES.....as in jan this year..

2. SINCE SALE OF HOUSES LESS, THEIR AVERAGE PRICE SHOULD FALL.....

3. HOWEVER, SHARP INCREASE IN AVERAGE PRICE OF HOUSES.....
.



WE NEED TO EXPLAIN......

AVERAGE PRICE WILL INCREASE IF SALE OF SOME HIGH PRICE HOUSES UNAFFECTED BY THE DECREASE IN INTEREST RATE PHENOMENA...SUCH HOUSES PRICE WILL CONTINUE TO ESCALATE AND ALSO will increase the overall average price of all houses.....

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay. correct
(B) Labor agreements of builders with construction unions are not due to expire until the next January. WHAT IS THIS TO DO WITH THE ARGUMENT! WRONG...
(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing. There may have been shortage of housing in last three years.... BUT FROM JAN THERE IS AN INCREASE ... AND WE ARE TALKING OF THAT.... HENCE WRONG...
(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months. WE ALREADY KNOW THIS... IF PEOPLE WAIT... AVAILABILITY WILL INCREASE... HENCE WRONG....
(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate. WE are not worried about what will happen to interest rates......IN FUTURE.... HENCE WRONG...


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Re: In January there was a large drop in the number of new [#permalink]

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New post 04 Jul 2016, 12:05
why the answer E is wrong? pls reply
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Re: In January there was a large drop in the number of new [#permalink]

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New post 08 Jul 2016, 04:59
Average price is the key words. rise in the average price not rise in he price of new houses, so high class houses and med class houses leads to average class house. any rise in high class house increase the average price in new houses.
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Re: In January there was a large drop in the number of new [#permalink]

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New post 20 Sep 2016, 14:28
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

Lets say there are 10 houses, 9 houses costs around £10 and last house cost about £100. Average cost is (90+100)/10 = 19

Due to decrease of interest rates
Lets say only 3 houses are being sold of £10 and sale of high priced house is unaffected, means average cost is (30+100)/4 = 32.5

So A is the right answer.

Hope my calculation helps
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Re: In January there was a large drop in the number of new [#permalink]

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New post 16 Nov 2016, 15:00
A allows for the relativey poorer population of those looking to purchase a home more freedom- they are looking for a steal! If wealthy prospective buyers don't care about this, we will see avg home price higher. Sell more homes to the wealthy at a stable or higher price than before and this will counter the "deals" poorer people are looking for.
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Re: In January there was a large drop in the number of new [#permalink]

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New post 17 Nov 2016, 00:18
Can anyone offer a detailed explanation for *C* linking it well with premise. Somehow I am not very satisfied with the explanations that have been posted w.r.t *C* earlier here.
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Re: In January there was a large drop in the number of new [#permalink]

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New post 03 Dec 2017, 21:18
SudiptoGmat wrote:
In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.
(B) Labor agreements of builders with construction unions are not due to expire until the next January.
(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.
(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.
(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate


Summary of passage: number of new houses sold decreased because interest rates were decreasing and people wanted to see how low rates would go. At the same time the average price of a new houses sold increased. We are looking for an explanation where the number of houses being sold has decreased but the average price of houses sold has increased.

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.
Keep-this statement gives us a reason why the average price of houses being sold is increasing despite the number of houses being sold decreasing.
(B) Labor agreements of builders with construction unions are not due to expire until the next January.
Irrelevant-we want to know about housing prices
(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.
Eliminate- this tells us that prices are rising but doesn't give us a reason why they rose sharply during this specific timeframe
(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.
Eliminate-This would weaken the argument because it is the opposite of what we are looking for. If inventory was high but demand was low, the prices should drop, not increase.
(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate
Eliminate-irrelevant- the passage doesn't mention anything about mortgage rates
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In January there was a large drop in the number of new [#permalink]

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New post 03 Jul 2018, 06:50
Hi abhimahna

Can you move the below comment to Most helpful expert reply

Thanks!

ChrisLele wrote:
The key here is the term "average price of home."

In answer choice (A) it gives us a concrete reason for why the average price of homes would increase: the number of expensive homes sold was higher than usual. Since the rest of the housing market - cheap homes to average priced homes - is not doing as well, the average price of homes sold is going to increase. Even if the number of expensive homes sold remained the same, the average price would still increase if the number of medium-priced homes sales decreased.

In answer (C), we are no longer dealing with averages but with number of units sold. However, we are not worried here about the number of houses sold per se, but the average price of homes sold.

Hope that helps :)

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Re: In January there was a large drop in the number of new [#permalink]

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New post 03 Jul 2018, 08:52
gmat1393 wrote:
Hi abhimahna

Can you move the below comment to Most helpful expert reply

Thanks!

ChrisLele wrote:
The key here is the term "average price of home."

In answer choice (A) it gives us a concrete reason for why the average price of homes would increase: the number of expensive homes sold was higher than usual. Since the rest of the housing market - cheap homes to average priced homes - is not doing as well, the average price of homes sold is going to increase. Even if the number of expensive homes sold remained the same, the average price would still increase if the number of medium-priced homes sales decreased.

In answer (C), we are no longer dealing with averages but with number of units sold. However, we are not worried here about the number of houses sold per se, but the average price of homes sold.

Hope that helps :)


Hey gmat1393 ,

This is done. Thank you!
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Re: In January there was a large drop in the number of new   [#permalink] 03 Jul 2018, 08:52

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