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

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VP
Joined: 22 Nov 2007
Posts: 1079
In Millington, a city of 50,000 people, Mercedes Pedrosa, a [#permalink]

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13 Feb 2008, 06:11
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In Millington, a city of 50,000 people, Mercedes Pedrosa, a realtor, calculated that a family with Millington’s median family income, \$28,000 a year, could afford to buy Millington’s median-priced \$77,000 house. This calculation was based on an 11.2 percent mortgage interest rate and on the realtor’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 Millington’s median-priced house?

(A) Millington’s total population was 45,000 people.
(B) Millington’s median annual family income was \$27,000.
(C) Millington’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.

Last edited by marcodonzelli on 13 Feb 2008, 09:45, edited 1 time in total.
Manager
Joined: 12 Feb 2008
Posts: 179
Re: cr - 1000 test I n.4 [#permalink]

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13 Feb 2008, 07:24
marcodonzelli wrote:
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 Millington’s median-priced house?

(A) Millington’s total population was 45,000 people.
(B) Millington’s median annual family income was \$27,000.
(C) Millington’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.

You definitely are missing here the actual question. it seems an interesting set up. Could you please submit again?
CEO
Joined: 17 Nov 2007
Posts: 3584
Concentration: Entrepreneurship, Other
Schools: Chicago (Booth) - Class of 2011
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Re: cr - 1000 test I n.4 [#permalink]

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13 Feb 2008, 10:44
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D

(A) Millington’s total population was 45,000 people. - it does not influence on the calculations.
(B) Millington’s median annual family income was \$27,000. - the calculations is shifted to families with income above the median family one.
(C) Millington’s median-priced house cost \$80,000. - the calculations is shifted to families with income above the median family one.
(D) The rate at which people in Millington had to pay mortgage interest was only 10 percent. - the best. The calculations is shifted to families with income below the median family one.
(E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing. - the calculations is shifted to families with income above the median family one.
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VP
Joined: 22 Nov 2007
Posts: 1079
Re: cr - 1000 test I n.4 [#permalink]

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13 Feb 2008, 10:59
walker wrote:
D

(A) Millington’s total population was 45,000 people. - it does not influence on the calculations.
(B) Millington’s median annual family income was \$27,000. - the calculations is shifted to families with income above the median family one.
(C) Millington’s median-priced house cost \$80,000. - the calculations is shifted to families with income above the median family one.
(D) The rate at which people in Millington had to pay mortgage interest was only 10 percent. - the best. The calculations is shifted to families with income below the median family one.
(E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing. - the calculations is shifted to families with income above the median family one.

yes
Manager
Joined: 02 Jan 2008
Posts: 193
Location: Toronto
Re: cr - 1000 test I n.4 [#permalink]

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13 Feb 2008, 11:30
I think its D too, but the reason why I chose D is because rest of the options make the mortgage payments higher, keeping the same income and prices.
Director
Joined: 26 Jul 2007
Posts: 535
Schools: Stern, McCombs, Marshall, Wharton
Re: cr - 1000 test I n.4 [#permalink]

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13 Feb 2008, 11:46
I agree it's D.

Were looking for the answer that will either reduce the cost of housing or increase the amount that can be spent on housing.

A) Doesnt affect the calculation
B) Doesnt affect the calculation
C) Increases the cost of housing
D) Reduces the cost of housing
E) Reduces amount available to spend on housing
SVP
Joined: 28 Dec 2005
Posts: 1558
Re: cr - 1000 test I n.4 [#permalink]

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13 Feb 2008, 21:01
I think its D as well. Since we want to account for individuals below the median, we have to find an answer that allows these families with less income to still afford the median house price. D does this by shifting the mortgage rates.
Senior Manager
Joined: 19 Nov 2007
Posts: 459
Re: cr - 1000 test I n.4 [#permalink]

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14 Feb 2008, 21:48
I am getting confused here.
Why wouldnt it be A?
Wouldnt changing the population size shift the median?
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Intern
Joined: 03 Jan 2010
Posts: 11
Re: cr - 1000 test I n.4 [#permalink]

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18 Oct 2011, 03:55
D is correct answer.
Senior Manager
Joined: 28 Dec 2010
Posts: 330
Location: India
Re: cr - 1000 test I n.4 [#permalink]

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23 Jun 2013, 01:03
vscid wrote:
I am getting confused here.
Why wouldnt it be A?
Wouldnt changing the population size shift the median?

Indeed I was confused between a & d as well. And vscid is absolutely right in saying changing the population size will shift the median. However the catch is we will never know the median will shift in which direction. For example if the error on population counting was related to the people with lower income the median will move up and vice versa. But D gives definite results.
Re: cr - 1000 test I n.4   [#permalink] 23 Jun 2013, 01:03
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# In Millington, a city of 50,000 people, Mercedes Pedrosa, a

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