In the last year, real estate prices, such as those for

Quant in verbal is always interesting.

In the last year, real estate prices, such as those for houses and condominiums, have gone up an average of 7% in the city of Galway but only 2% in the town of Tuam. On the other hand, average rents for apartments have risen 8% in Tuam over the last year, but only 4% in Galway.

Which of the following is an inference that can be reasonably drawn from the prem- ises given above?

(A) In the last year, the ratio of average apartment rents to average real estate prices has increased in Tuam but fallen in Galway.
Correct.

Tuam:
Average rents: Ro --> 1.08*Ro
Real estates: Eo --> 1.02*Eo
Ratio of average rents/average real estates = R/E
\(\frac{Ro}{Eo} < \frac{1.08*Ro}{1.02*Eo}\)
--> Ratio has increased.

Galway:
Average rents: Ro --> 1.04*Ro
Real estates: Eo --> 1.07*Eo
Ratio of average rents/average real estates = R/E
\(\frac{Ro}{Eo} > \frac{1.04*Ro}{1.07*Eo}\)
--> Ratio has decreased.

A is correct.

(B) Tuam has experienced a greater shift in demand toward the rental market than Galway has.
Wrong. increased percentage does not mean increased demand.

(C) It has become easier for Galway real estate to be bought and sold, whereas it has become easier for Tuam real estate to be rented.
Wrong. Can't infer which city becomes easier for real estate to be bough and sold.

(D)The supply of rental apartment units has decreased more in Tuam than in Galway.
Wrong. Nothing about supply. Infer too far.

(E) The average amount spent on housing is higher in Galway than it is in Tuam.
Wrong. Nothing about average amount spent on housing. Infer too far.

NOTE: when you see Quant in question stem, try to link to answers that have Quant embedded.

Hope it helps.

Can anybody help me with this question please, thanks![/quote]

(A) Correct: You can see the ratio for Tuam is 8/2 but for Galway its 4/7
(B) There is nothing in the passage that is evidence of greater demand.
(C) Nothing in the passage that talks about ease of rent
(D) There is no information that points to evidence of supply
(E) For all we know, Tuam houses could have been $100 but growing slowly while Galway houses could have been $1 but growing fast.

Important to stay within the context of the passage, we don't want to make any assumptions.

First of all, thanks for the reply!

The Problem I had with A was that I thought there have to be some other numbers from another year so I can see how they de- or increased. I see, though, that all the other choices are wrong.

Prices or other amounts changing is often a GMAT trick question. You assume that because rents go up in
city A that A will become more expensive than city B. Problem is you are never given the whole amount
of A and B. So, even if rents go up in A, it could still be cheaper than in B.

Can someone provide a exhaustive solution to this "REALLY HARD" question?? help please...

As you an see that mathematically A is correct. Further it also includes the words "in the last year", just like the passage which makes it the most accurate conclusion.
Hope it helps!
Consider Kudos !

Using excel workbook (attached), we can manipulate different numbers and see the result conforms with option A.

_________________

Please help me out with the OA. How can one assume the rent and the real estate price to be same for both the towns in the last year?

Though I am not expert, I will be happy, if I can help you.

Firstly, we don't need to assume the rent and the real estate price to be same for both the towns in the last year or before the last year. Please, see the attached file.

_________________

Comprehensive explanations are given by several experts.I just added one thing the principle underlying inference questions is all inference choice has to be according to the passage/ stimulus and there is no new information.

Although A is the definitive answer, how can we eliminate B? Doesn't increase in price mean an an increase in demand for rental apartments?
sayantanc2k , chetan2u

Hi,
Not necessarily.
The increase in price could be because of new taxes or many other reasons.
_________________

Quick tip for GMAT CR inference questions. If you are not sure of an answer choice (say you weren't sure how to mathematically prove A or you couldn't see it), just focus on eliminating every other answer choice. That's how I got to A. Once I eliminated everything else, I read choice A and saw the stimulus provided enough info (Percentages) to draw this inference. Don't blindly guess when you don't have to! Just ask yourself can this choice be 100% proven based on the facts given. If not, eliminate that choice.

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.
_________________