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# In the past year, there has been a large drop in the number

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Manager
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In the past year, there has been a large drop in the number [#permalink]

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16 Jul 2009, 04:03
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In the past year, there has been a large drop in the number of new cars sold, due to harsh economic conditions in the marketplace and high taxes. At the same time, the average price paid for a new car has risen dramatically.
Which of the following, if true, best explains the increase in the average price of a new car?
(A) The price of used cars has climbed steadily over the past ten years.
(B) There will be a tax reduction later in the year which is expected to aid moderate and low income families.
(C) The market for expensive car has been unaffected by the current economic conditions.
(D) Economic conditions are expected to get significantly worse before the end of the year.>>
(E) Low demand for trucks and vans has led to lower production in the factories.

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Intern
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16 Jul 2009, 04:13
What is the OA?

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Name: Ronak Amin
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16 Jul 2009, 04:21
This has come a lot of times. Answer is C.

=> Only if more expensive cars are bought the average price per car can increase, given that cheap cars are not sold. ( in other words, the revenue generated by selling one expensive car is so high that overall even if 2-3 cheap cars are sold less we get a higher average price per car )

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17 Jul 2009, 03:33
OA is C

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Manager
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18 Jul 2009, 02:53
It took long time for me to do it!

I go for C because there are relevant between economic condition and average price paid.
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Director
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18 Jul 2009, 09:45
IMO C

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(1:30)
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Director
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18 Jul 2009, 09:51
In the past year, there has been a large drop in the number of new cars sold, due to harsh economic conditions in the marketplace and high taxes. At the same time, the average price paid for a new car has risen dramatically.
Which of the following, if true, best explains the increase in the average price of a new car?
(A) The price of used cars has climbed steadily over the past ten years. Not interested in used cars in this context, only new cars
(B) There will be a tax reduction later in the year which is expected to aid moderate and low income families. ==> Talking about the moderate and low income families. They will have higher income in-hand but will not buy the new cars if the market price has increased as they would have done so with the last year lower income and lower prices
(C) The market for expensive car has been unaffected by the current economic conditions.Correctly talks about the average of the new car market. It implies that the fewer inexpensive cars and same expensive cars sold this year than the last year. Average new car price do increase with that.
(D) Economic conditions are expected to get significantly worse before the end of the year.>>
Out of Scope
(E) Low demand for trucks and vans has led to lower production in the factories.
Out of Scope
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20 Jul 2009, 02:44
Duh!, I was looking for factor which lead to increase in car prices considering expensive cars falls in an unrelated segment.

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21 Jul 2009, 08:23
In the past year, there has been a large drop in the number of new cars sold, due to harsh economic conditions in the marketplace and high taxes. At the same time, the average price paid for a new car has risen dramatically.

Which of the following, if true, best explains the increase in the average price of a new car?

(A) The price of used cars has climbed steadily over the past ten years. – how does that affect new cars
(B) There will be a tax reduction later in the year which is expected to aid moderate and low income families. - This will not affect the price paid for the new car
(C) The market for expensive car has been unaffected by the current economic conditions. – CORRECT, since with the decrease in sales there is also a decrease in total number, so we cannot expect the average price to go down just because of lower sales. On the other hand, the tax hike has increased the new car’s cost and the fact that expensive cars are still being sold increases the average.
(D) Economic conditions are expected to get significantly worse before the end of the year.>> - out of scope
(E) Low demand for trucks and vans has led to lower production in the factories. – no connection with new car sales

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Re: CR doubt   [#permalink] 21 Jul 2009, 08:23
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