Investing in real estate would be a profitable venture at this time. A : Critical Reasoning (CR)

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Bunuel

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Investing in real estate would be a profitable venture at this time. A [#permalink]

Updated on: 20 Dec 2019, 07:51

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Investing in real estate would be a profitable venture at this time. A survey in House magazine revealed that 85% of the magazine's readers are planning to buy a second home over the next few years. A study of the real estate industry, however, revealed that the current supply of homes could only provide for 65% of that demand each year.

Which of the following, if true, reveals a weakness in the evidence cited above?

(A) Real estate is a highly labor-intensive business.

(B) Home builders are not evenly distributed across the country.

(C) The number of people who want second homes has been increasing each year for the past ten years.

(D) Readers of House magazine are more likely than most people to want second homes.

(E) House magazine includes articles about owning a second home as well as articles about building a second home.

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Originally posted by Bunuel on 06 Jul 2018, 05:24.
Last edited by Bunuel on 20 Dec 2019, 07:51, edited 2 times in total.

Edited the question.

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dave13

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

06 Jul 2018, 06:53

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Bunuel wrote:

Investing in real estate would be a profitable venture at this time. A survey in House magazine revealed that 85% of the magazineâ€™s readers are planning to buy a second home over the next few years. A study of the real estate industry, however, revealed that the current supply of homes could only provide for 65% of that demand each year.

Which of the following, if true, reveals a weakness in the evidence cited above?

(A) Real estate is a highly labor-intensive business.

(B) Home builders are not evenly distributed across the country.

(C) The number of people who want second homes has been increasing each year for the past ten years.

(D) Readers of House magazine are more likely than most people to want second homes.

(E) House magazine includes articles about owning a second home as well as articles about building a second home.

here is my reasoning

clearly A and B strenghthen,

C is irrelevant

between D and E , i will choose D because we dont know how many readers constitute 85%.

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sudarshan22

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

06 Jul 2018, 10:27

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+1 for D.

(D) Readers of House magazine are more likely than most people to want second homes. --> Correct

Reason : The logical flaw in stimulus is that it readily assumes the sample provided is enough to draw the conclusion that the investment is booming. But, option D weakens the argument by stating that 85% (high interest) is only among the magazine readers and not as a whole.

Hence, D.
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Abhishek009

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

06 Jul 2018, 12:06

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sudarshan22 wrote:

+1 for D.

(D) Readers of House magazine are more likely than most people to want second homes. --> Correct

Reason : The logical flaw in stimulus is that it readily assumes the sample provided is enough to draw the conclusion that the investment is booming. But, option D weakens the argument by stating that 85% (high interest) is only among the magazine readers and not as a whole.

Hence, D.

With the same opinion,

Quote:

A survey in House magazine revealed that 85% of the magazineâ€™s readers are planning to buy a second home over the next few years.

Say if there are 10000 citizens and only 1000 reads the House magazine then out of those only 850 are planning to buy a second home.

Thus actually it represents only 8.50 % of the citizens..

Hence with (D)
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warrior1991

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

09 Jul 2018, 22:31

Abhishek009 wrote:

sudarshan22 wrote:

+1 for D.

(D) Readers of House magazine are more likely than most people to want second homes. --> Correct

Reason : The logical flaw in stimulus is that it readily assumes the sample provided is enough to draw the conclusion that the investment is booming. But, option D weakens the argument by stating that 85% (high interest) is only among the magazine readers and not as a whole.

Hence, D.

With the same opinion,

Quote:

A survey in House magazine revealed that 85% of the magazineâ€™s readers are planning to buy a second home over the next few years.

Say if there are 10000 citizens and only 1000 reads the House magazine then out of those only 850 are planning to buy a second home.

Thus actually it represents only 8.50 % of the citizens..

Hence with (D)

I second your reasoning. Perfectly highlighted.

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LZ123

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

01 Apr 2019, 04:46

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Abhishek009 wrote:

sudarshan22 wrote:

+1 for D.

(D) Readers of House magazine are more likely than most people to want second homes. --> Correct

Reason : The logical flaw in stimulus is that it readily assumes the sample provided is enough to draw the conclusion that the investment is booming. But, option D weakens the argument by stating that 85% (high interest) is only among the magazine readers and not as a whole.

Hence, D.

With the same opinion,

Quote:

A survey in House magazine revealed that 85% of the magazineâ€™s readers are planning to buy a second home over the next few years.

Say if there are 10000 citizens and only 1000 reads the House magazine then out of those only 850 are planning to buy a second home.

Thus actually it represents only 8.50 % of the citizens..

Hence with (D)

Ok, but the last sentence is saying that ''the current supply of homes could only provide for 65% of THAT demand (or 65% of 850) each year''. If the study is regarding specifically the demand of House Magazine readers, D wouldn't be right. It was only me who had this interpretation?

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jachavez06

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

05 Apr 2019, 18:24

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LZ123 wrote:

Abhishek009 wrote:

sudarshan22 wrote:

+1 for D.

(D) Readers of House magazine are more likely than most people to want second homes. --> Correct

Reason : The logical flaw in stimulus is that it readily assumes the sample provided is enough to draw the conclusion that the investment is booming. But, option D weakens the argument by stating that 85% (high interest) is only among the magazine readers and not as a whole.

Hence, D.

With the same opinion,

Quote:

A survey in House magazine revealed that 85% of the magazineâ€™s readers are planning to buy a second home over the next few years.

Say if there are 10000 citizens and only 1000 reads the House magazine then out of those only 850 are planning to buy a second home.

Thus actually it represents only 8.50 % of the citizens..

Hence with (D)

Ok, but the last sentence is saying that ''the current supply of homes could only provide for 65% of THAT demand (or 65% of 850) each year''. If the study is regarding specifically the demand of House Magazine readers, D wouldn't be right. It was only me who had this interpretation?

I had the same interpretation.

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Bunuel

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

20 Dec 2019, 07:52

Expert Reply

Bunuel wrote:

Investing in real estate would be a profitable venture at this time. A survey in House magazine revealed that 85% of the magazine's readers are planning to buy a second home over the next few years. A study of the real estate industry, however, revealed that the current supply of homes could only provide for 65% of that demand each year.

Which of the following, if true, reveals a weakness in the evidence cited above?

(A) Real estate is a highly labor-intensive business.

(B) Home builders are not evenly distributed across the country.

(C) The number of people who want second homes has been increasing each year for the past ten years.

(D) Readers of House magazine are more likely than most people to want second homes.

(E) House magazine includes articles about owning a second home as well as articles about building a second home.

TWIN QUESTION: https://gmatclub.com/forum/investing-in ... 69846.html
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shubham88

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

02 Jul 2020, 07:55

I have a doubt. The premise says that 85% of survey takers want to buy a 2nd house and only 65% of that demand could be met. *current supply of homes could only provide for 65% of that demand each year*. If only magazine readers want to buy a 2nd house, doesn't that mean demand > supply, therefore the prices will go up?

Please help me out guys

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abhi19051990

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

03 Jul 2020, 05:39

shubham88 wrote:

I have a doubt. The premise says that 85% of survey takers want to buy a 2nd house and only 65% of that demand could be met. *current supply of homes could only provide for 65% of that demand each year*. If only magazine readers want to buy a 2nd house, doesn't that mean demand > supply, therefore the prices will go up?

Please help me out guys

The weakness against the argument lies in the fact that it's pretty much unsure if this sample population of readers is representative of the demand for buying 2nd home. This in turn brings up the conclusion that these readers can be more willing to want to buy and hence do not actually represent the increasing demand.

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emcheeks

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

07 Jul 2020, 15:46

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Investing in real estate would be a profitable venture at this time. A survey in House magazine revealed that 85% of the magazine's readers are planning to buy a second home over the next few years. A study of the real estate industry, however, revealed that the current supply of homes could only provide for 65% of that demand each year.

Which of the following, if true, reveals a weakness in the evidence cited above?

Premise: 85% of magazine readers want to buy houses
Premise: 65% of those are satisfied.
Conclusion: real estate is profitable (why? because demand is greater than supply)
Possible weaken choice: when we see percentage, we should be cautious and think whether it could be translated into numbers. In addition, since the percentage here seems to describe surveyed people. We can think of: whether samples were biased, whether questions were biased (not shown here), whether the responses were biased (not shown here).
(If you couldn't think of the above, it's ok. Look at my explanations below)

(A) Real estate is a highly labor-intensive business.

labor intensive doesn't have anything to do with the "profit" side of real estate in this problem.
Someone might think that labor intensive might mean higher wages, etc. But it is possible that we have the same number of people with the same wages (ps: happens a lot in developing counties where people were exploited by capitalism). Therefore, labor-intensive is unable to prove that real estate is not profitable.

(B) Home builders are not evenly distributed across the country.

Whether home builders are evenly distributed have nothing to do with profitability. Unless the choice says, home builders are not evenly distributed which somehow make real estate not profitable etc.

(C) The number of people who want second homes has been increasing each year for the past ten years.

Increasing number of people only make this industry more opportunities/clients -> more lucrative. Strengthen the conclusion.

(D) Readers of House magazine are more likely than most people to want second homes.

I haven't seen any good explanations for this choice under this problem. Here is my try:
85% of the magazines readers. The people who conduct the research automatically apply this percentage 85% to the broader groups / entire society. And that 65% is obtained by real research. Ehh that sounds horrible. For example: let's say an entire society have 100 people. The magazine surveyed 20 ppl and 85% of them (17 ppl) want to buy a house. Then the magazine simply apply this 85% to that 100 people society. At the same time, there is a research saying currently there are 65 people being fulfilled. Note: 17 vs. 65. Not very profitable!

I seriously doubt that I made myself clear... But srsly, by looking at other answer choices, this is the only one that make a little tiny sense. But any opinions and discussions are welcomed!

(E) House magazine includes articles about owning a second home as well as articles about building a second home.

Isn't that what a typical house magazine includes? I don't know why so many people chose E, but I thought what E can do is this: by including so many things about second house, increase someone's desire to buy a house. Therefore, the survey is biased because most of these ppl now want to buy a second house after reading all those articles! But isn't that what D is saying? D is much clearer.
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MrSandman

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Investing in real estate would be a profitable venture at this time. A [#permalink]

05 Aug 2020, 03:47

As always, this problem is about a poor sample of respondents. The answer D is absolutely correct. On the other hand, planning something and actually doing it is different. For example, I was planning to buy a new house, but I wasn't able to do it, because I didn't have the money for it, lol. But two months ago I've inherited a house in Coventry and sold it to this https://www.thepropertybuyingcompany.co.uk company. Now I have enough money for the actual buying a house somewhere. And now I don't have only plans, but a possibility.

Kikorogers

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

14 Oct 2020, 04:23

I would like to know if that statistic still stands today, notwithstanding the flaws in the argument anyway (the magazine may have only had 20 readers or 5 take the survey). With properties spiking at the moment, but expected to fall in Q1 next year I suspect there will be more people selling to companies than buying. The second home in the countryside is now more likely to become the main home. And buying pied a terres in the city seems less appealing.

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sarthakkhurana01

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Re: Investing in real estate would be a profitable venture at this time. A [#permalink]

24 Oct 2021, 04:33

There is a fundamental flaw in the language of the question, the questions says 65% of 'that' demand... even if there are 100 readers to the magazine and 85 of them are wanting to own a second home, the current supply is only enough to meet 65% of 'that' demand i.e. 65% of 85 people... Option E touches upon people actually building a home themselves and opening out an option for people to actually build a home rather than relying on the 'supply' of homes... as per the current language E should be correct, however, common logic says this is highly unrealistic to have supply for only 65% of magazine readers... I choose Option E as per the question

Please help if there is a flaw in my reasoning

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