Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized for You

we will pick new questions that match your level based on your Timer History

Track Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 500,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

In Millington, a city of 50,000 people, Mercedes Pedrosa, a [#permalink]

Show Tags

18 Nov 2006, 04:47

00:00

A

B

C

D

E

Difficulty:

45% (medium)

Question Stats:

80% (02:12) correct
20% (03:23) wrong based on 13 sessions

HideShow timer Statistics

In Millington, a city of 50,000 people, Mercedes Pedrosa, a realtor, calculated that a family with Millingtonâ€™s median family income, $28,000 a year, could afford to buy Millingtonâ€™s median-priced $77,000 house. This calculation was based on an 11.2 percent mortgage interest rate and on the realtorâ€™s assumption that a family could only afford to pay up to 25 percent of its income for housing. Which of the following corrections of a figure appearing in the passage above, if it were the only correction that needed to be made, would yield a new calculation showing that even incomes below the median family income would enable families in Millington to afford Millingtonâ€™s median-priced house? (A) Millingtonâ€™s total population was 45,000 people. (B) Millingtonâ€™s median annual family income was $27,000. (C) Millingtonâ€™s median-priced house cost $80,000. (D) The rate at which people in Millington had to pay mortgage interest was only 10 percent. (E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing.

Re: In Millington, a city of 50,000 people, Mercedes Pedrosa, a [#permalink]

Show Tags

18 Nov 2006, 04:59

pawan82 wrote:

In Millington, a city of 50,000 people, Mercedes Pedrosa, a realtor, calculated that a family with Millingtonâ€™s median family income, $28,000 a year, could afford to buy Millingtonâ€™s median-priced $77,000 house. This calculation was based on an 11.2 percent mortgage interest rate and on the realtorâ€™s assumption that a family could only afford to pay up to 25 percent of its income for housing. Which of the following corrections of a figure appearing in the passage above, if it were the only correction that needed to be made, would yield a new calculation showing that even incomes below the median family income would enable families in Millington to afford Millingtonâ€™s median-priced house? (A) Millingtonâ€™s total population was 45,000 people. (B) Millingtonâ€™s median annual family income was $27,000. (C) Millingtonâ€™s median-priced house cost $80,000. (D) The rate at which people in Millington had to pay mortgage interest was only 10 percent. If they have to pay less mortage interest, then people with less median income also can afford house. (E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing.

_________________

The path is long, but self-surrender makes it short;
the way is difficult, but perfect trust makes it easy.

Re: In Millington, a city of 50,000 people, Mercedes Pedrosa, a [#permalink]

Show Tags

19 Nov 2006, 07:05

D is the only choice that would help families with incomes below the median family income (< $28k) to buy the median priced house.

Ok, why are the other choices incorrect?

(A) Millingtonâ€™s total population was 45,000 people.

This will shift the median itself. We don't know what the new median would be but it would be lower than $28k and hence assuming 25% of an amount that's even lower than @28k would not help the families buy the median priced house.

(B) Millingtonâ€™s median annual family income was $27,000.

Again a lower median family income would not help

(C) Millingtonâ€™s median-priced house cost $80,000.

This again kills the lower than the median income families. Can't afford.

(D) The rate at which people in Millington had to pay mortgage interest was only 10 percent.

Of course here when you reduce the interest rate the total amount payable becomes less and hence more lower than median income families can be included in the ambit.

(E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing.

Nope.. this lowers the disposable income that can be used for paying.

Re: In Millington, a city of 50,000 people, Mercedes Pedrosa, a [#permalink]

Show Tags

19 Nov 2006, 07:33

Yeah get out your econ caps....you have to pick the one that increases the consumers purchasing power, and a lower interest rate is the only one that does that
_________________

wall street...bulls, bears, people from connecticut

Campus visits play a crucial role in the MBA application process. It’s one thing to be passionate about one school but another to actually visit the campus, talk...

Its been long time coming. I have always been passionate about poetry. It’s my way of expressing my feelings and emotions. And i feel a person can convey...

Marty Cagan is founding partner of the Silicon Valley Product Group, a consulting firm that helps companies with their product strategy. Prior to that he held product roles at...

Written by Scottish historian Niall Ferguson , the book is subtitled “A Financial History of the World”. There is also a long documentary of the same name that the...