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

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Concentration: Strategy
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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, 23:18
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, 20:18
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
Re: In January there was a large drop in the number of new   [#permalink] 03 Dec 2017, 20:18

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