adkikani wrote:
DavidTutorexamPAL aragonn VeritasKarishma GMATNinja nightblade354gmat1393Can you help me in the understanding of argument?
Quote:
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.
Median family income: $28 k
Available to buy house: $7 K
Additional loan interest: 11.2%
I could not comprehend the numbers above.
Quote:
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?
So, are we trying to say that above premises are incorrect? We never challenge facts in CR premises, do we?
The question itself explicitly gives us permission to change a single fact in the passage. It's very similar to "if true, which of the following..." except that we're given one changed fact, as opposed to one additional fact.
As covered by
PeepalTree,
sandman13,
cngthanh190,
aragonn, and others (thanks for your explanations!), we can step back from the specific figures and ask ourselves: What
kind of change would make the median-priced house affordable on a below-median income?
Quote:
(A) Millington’s total population was 45,000 people.
Quote:
(B) Millington’s median annual family income was $27,000.
Huh? (A) and (B) don't fit into this question all. Total population has nothing to do with whether a family can afford to buy a home. And changing to the median income won't help or hurt, because we're specifically concerned with what's affordable on a
below-median income.
That's why we eliminate (A) and (B) immediately.
Quote:
(C) Millington’s median-priced house cost $80,000.
If we change the cost of a median-priced house, then we could definitely make it affordable to more families. But this change goes in the opposite direction of what we want! $80,000 would be less affordable than $77,000, so we'll eliminate (C).
Quote:
(D) The rate at which people in Millington had to pay mortgage interest was only 10 percent.
(D) is basically a better version of (C). This choice identifies a factor that could make houses more affordable: The amount of interest paid on the house's mortgage. And it tells us that the amount of interest is going down. Since nothing else in the passage changes, this would result in more families being able to afford the median priced house -- even if they make less than the median income of $28,000 per year.
Quote:
(E) Families in Millington could only afford to pay up to 22 percent of their annual income for housing.
Like (C), this choice identifies a variable that determines what families can afford to pay, but it goes in the wrong direction. Since 22% is a lower ceiling than 25%, making this one change would mean poorer families have a harder time buying median-priced house.
I hope this shows how to tackle the question and eliminate answer choices without doing any arithmetic.
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