GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 10 Dec 2018, 22:57

Close

GMAT Club Daily Prep

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.

Close

Request Expert Reply

Confirm Cancel
Events & Promotions in December
PrevNext
SuMoTuWeThFrSa
2526272829301
2345678
9101112131415
16171819202122
23242526272829
303112345
Open Detailed Calendar
  • Free GMAT Prep Hour

     December 11, 2018

     December 11, 2018

     09:00 PM EST

     10:00 PM EST

    Strategies and techniques for approaching featured GMAT topics. December 11 at 9 PM EST.
  • Free lesson on number properties

     December 10, 2018

     December 10, 2018

     10:00 PM PST

     11:00 PM PST

    Practice the one most important Quant section - Integer properties, and rapidly improve your skills.

In some countries, real estate agents negotiating with

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Manager
Manager
avatar
Joined: 31 Oct 2011
Posts: 235
In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 22 Mar 2012, 23:58
1
8
00:00
A
B
C
D
E

Difficulty:

  55% (hard)

Question Stats:

66% (02:32) correct 34% (02:36) wrong based on 447 sessions

HideShow timer Statistics

In some countries, real estate agents negotiating with prospective clients who want to sell their houses all recommend initial asking prices that are as high as the current market permits. They do this because potential sellers are more likely to entrust their houses to the agent who values them highest. In a housing market with falling demand, the predictable result is a sharper drop in the number of houses sold than the drop in demand alone would account for.

Q) Which of the following, if true, best explains the result described as predictable above?

a) A drop in demand for houses depresses prices disproportionately if earlier strong demand stimulated much new construction.

b) Real estate agents do not earn the commission on houses they help sell until the sale is actually executed.

c) Many people sell their old house below the asking price in order to obtain the funds to buy a new one

d) In a housing market with rising demand, even houses that were originally overpriced usually sell at the asking price.

e) For many sellers of houses, the initial asking price comes to represent the true value, below which they will not sell.
Most Helpful Expert Reply
Magoosh GMAT Instructor
User avatar
Joined: 28 Nov 2011
Posts: 301
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 09 Apr 2012, 15:51
4
3
This indeed as a resolve the paradox question, because there is a sharper decrease in the number of homes sold than the drop in the market alone accounts for.

We need an answer choice that best explains this trend:

a) A drop in demand for houses depresses prices disproportionately if earlier strong demand stimulated much new construction.

Doesn't help explain the sharper drop in home sales.

b) Real estate agents do not earn the commission on houses they help sell until the sale is actually executed.

Whether agents earn commission doesn't explain why houses aren't sold.

c) Many people sell their old house below the asking price in order to obtain the funds to buy a new one.

Here we are dealing with sellers who sell low, not those who can't sell because their price is too high.

d) In a housing market with rising demand, even houses that were originally overpriced usually sell at the asking price.

We are dealing with a housing market with falling demand.

e) For many sellers of houses, the initial asking price comes to represent the true value, below which they will not sell.

This answer choice suggests that sellers will not go below a certain value because they believe that the house to be valued at the cost of their initial offer. Since their initial offer is high (the agent who makes the highest bid is more likely to be recruited), these sellers will unlikely be able to sell their homes. ANSWER
_________________

Christopher Lele
Magoosh Test Prep

Image

Image

General Discussion
SVP
SVP
User avatar
G
Status: Top MBA Admissions Consultant
Joined: 24 Jul 2011
Posts: 1519
GMAT 1: 780 Q51 V48
GRE 1: Q800 V740
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 23 Mar 2012, 01:17
1
Clearly (E).

A: Unrelated. We have no information about earlier strong demand.
B: Out of scope. The commission of the agents is not being discussed here.
C: Out of scope. Old and new houses are not being discussed here.
D: We are discussing a market with falling, not rising, demand. Out of scope.
E: CORRECT. If the initial asking price is the minimum that the seller will accept, a lot many more houses will remain unsold than could be explained by just a drop in demand. This will happen because less houses will be sold due to lesser demand AND even those houses that could have been sold (in spite of the reduced demand) will remain unsold because the owners perceive that the price being offered is too low
_________________

GyanOne | Top MBA Rankings and MBA Admissions Blog

Top MBA Admissions Consulting | Top MiM Admissions Consulting

Premium MBA Essay Review|Best MBA Interview Preparation|Exclusive GMAT coaching

Get a FREE Detailed MBA Profile Evaluation | Call us now +91 98998 31738

Manager
Manager
avatar
Joined: 09 Jul 2010
Posts: 87
GMAT ToolKit User
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 09 Apr 2012, 13:24
Is this really resolve a paradox question. Isnt this an assumption question. Resolve does not have a conclusion
Senior Manager
Senior Manager
User avatar
B
Joined: 01 Nov 2013
Posts: 293
GMAT 1: 690 Q45 V39
WE: General Management (Energy and Utilities)
Reviews Badge
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 06 Mar 2015, 06:31
eybrj2 wrote:
In some countries, real estate agents negotiating with prodpective clients who want to sell their houses all recommend initial asking prices that are as high as the current market permits. They do this because potential sellers are more likely to entrust their houses to the agent who values them highest. In a housing market with falling demand, the predictable result is a sharper drop in the number of houses sold than the drop in demand alone woyld account for.

Q) Which of the following, if true, best explains the result described as predictable above?

a) A drop in demand for houses depresses prices disproportionately if earlier strong demand stimulated much new construction.

b) Real estate agents do not earn the commission on houses they help sell umtil the slae is actually executed.

c) Many people sell their old house below the asking price in order to obtain the funds to buy a new one

d) In a housing market with rising demand, even houses that were originally overpriced usually sell at the asking price.

e) For many sellers of houses, the initial asking price comes to represent the true value, below which they will not sell.




Please explain why A is wrong???
_________________

Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time.

I hated every minute of training, but I said, 'Don't quit. Suffer now and live the rest of your life as a champion.-Mohammad Ali

Director
Director
User avatar
Joined: 07 Aug 2011
Posts: 538
Concentration: International Business, Technology
GMAT 1: 630 Q49 V27
GMAT ToolKit User
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 06 Mar 2015, 23:13
eybrj2 wrote:
In some countries, real estate agents negotiating with prodpective clients who want to sell their houses all recommend initial asking prices that are as high as the current market permits. They do this because potential sellers are more likely to entrust their houses to the agent who values them highest. In a housing market with falling demand, the predictable result is a sharper drop in the number of houses sold than the drop in demand alone would account for.

Q) Which of the following, if true, best explains the result described as predictable above?

a) A drop in demand for houses depresses prices disproportionately if earlier strong demand stimulated much new construction.

b) Real estate agents do not earn the commission on houses they help sell until the sale is actually executed.

c) Many people sell their old house below the asking price in order to obtain the funds to buy a new one

d) In a housing market with rising demand, even houses that were originally overpriced usually sell at the asking price.

e) For many sellers of houses, the initial asking price comes to represent the true value, below which they will not sell.



I am finding it really hard that what are the two things compared here

1) a sharper drop in the number of houses sold (so ideally if 100 houses would have been sold now only 20 would be sold )
2) the drop in demand alone would account for. ( what is this ? completely bounced over my head. )

can someone please help me to understand ?

thanks
Lucky
_________________

Thanks,
Lucky

_______________________________________________________
Kindly press the Image to appreciate my post !! :-)

Director
Director
User avatar
Joined: 07 Aug 2011
Posts: 538
Concentration: International Business, Technology
GMAT 1: 630 Q49 V27
GMAT ToolKit User
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 06 Mar 2015, 23:37
Lucky2783 wrote:
eybrj2 wrote:
In some countries, real estate agents negotiating with prodpective clients who want to sell their houses all recommend initial asking prices that are as high as the current market permits. They do this because potential sellers are more likely to entrust their houses to the agent who values them highest. In a housing market with falling demand, the predictable result is a sharper drop in the number of houses sold than the drop in demand alone would account for.

Q) Which of the following, if true, best explains the result described as predictable above?

a) A drop in demand for houses depresses prices disproportionately if earlier strong demand stimulated much new construction.

b) Real estate agents do not earn the commission on houses they help sell until the sale is actually executed.

c) Many people sell their old house below the asking price in order to obtain the funds to buy a new one

d) In a housing market with rising demand, even houses that were originally overpriced usually sell at the asking price.

e) For many sellers of houses, the initial asking price comes to represent the true value, below which they will not sell.



I am finding it really hard that what are the two things compared here

1) a sharper drop in the number of houses sold (so ideally if 100 houses would have been sold now only 20 would be sold )
2) the drop in demand alone would account for. ( what is this ? completely bounced over my head. )

can someone please help me to understand ?

thanks
Lucky



i think i got it after reading the stem 10 times, and this is the problem i am facing with most of the CR questions that i take a lot of time to understand what is happening in the stem.
Let me try to summarize the question stem.
on Agents' recommendation the sellers are asking for price as high as current market price.
So if there is a falling demand then such advise to sell at current market price or basically sellers strong stand to sell it only at asking price would further cause the demand to fall.

so lets assume there were 10 old house and 10 new house , current market price for old units is 100K $ and new units is 150K $ , lets assume demand is falling , what will happen if the Old unit Owners are not ready to decrease the unit cost ? the demand will further go down .

E explains this most correctly.

Experts ( ChrisLele ), please verify my reasoning.

thank you,
Lucky
_________________

Thanks,
Lucky

_______________________________________________________
Kindly press the Image to appreciate my post !! :-)

Intern
Intern
avatar
Joined: 02 Oct 2015
Posts: 14
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 30 Oct 2015, 20:57
Hi Samichange,

(A) is wrong because it doesn't state anything regarding the sharper drop in the number of houses sold. It just says that drop in demand lowers the prices disproportionately. We are looking for an option which helps us to understand why there is sharper drop in the number of houses sold than the drop in the demand.
Non-Human User
User avatar
Joined: 01 Oct 2013
Posts: 3503
Premium Member
Re: In some countries, real estate agents negotiating with  [#permalink]

Show Tags

New post 17 Aug 2018, 04:58
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________

-
April 2018: New Forum dedicated to Verbal Strategies, Guides, and Resources

GMAT Club Bot
Re: In some countries, real estate agents negotiating with &nbs [#permalink] 17 Aug 2018, 04:58
Display posts from previous: Sort by

In some countries, real estate agents negotiating with

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


Copyright

GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.