Rural households have more purchasing power than do urban or suburban

Question

Rural households have more purchasing power than do urban or suburban households at the same income level, since some of the income urban and suburban households use for food and shelter can be used by rural households for other needs.

Which of the following inferences is best supported by the statement made above?

Which of the following inferences is best supported by the statement made above?

(A) The average rural household includes more people than does the average urban or suburban household.

(B) Rural households have lower food and housing costs than do either urban or suburban households.

(C) Suburban households generally have more purchasing power than do either rural or urban households.

(D) The median income of urban and suburban households is generally higher than that of rural households.

(E) All three types of households spend more of their income on food and housing than on all other purchases combined.

AnishPassi · Accepted Answer

The Story     
 Rural households have more purchasing power than do urban or suburban households at the same income level,  – So they’re talking about two sets of households (rural and non-rural) at the same income level. One set of households has more purchasing power than the other. ( Despite the same income level, certain households have more purchasing power. I wonder why. )

since some of the income urban and suburban households use for food and shelter can be used by rural households for other needs.  – This part gives the reason. A portion of the income non-rural households use for food and shelter can be used by rural households for other needs.
(Non-rural households use a certain amount for food and shelter. Rural households use some of that amount for other needs. So, rural households use a smaller amount for food and shelter.)

Author’s logic: 
The author gives a reason for why rural households have more purchasing power than do non-rural households at the same income level. The reason is that a portion of the income non-rural households use for food and shelter can be used by rural households for other needs.
Why can a portion of the  income be used for other needs by rural households?  Either food and shelter would be cheaper, or rural households would have lower expenses – e.g. joint families living together. Essentially, rural households must be spending less on food and shelter than non-rural households do. That’s why they’d have some money left over after spending on food and shelter.

Gap(s) in logic:  
What if food and shelter expense is lower in rural areas, but expenses for other needs are higher? To compare purchasing powers based just on food and shelter expenses is incomplete.

Question Stem

Which of the following inferences is best supported by the statement made above?

Framework 
We’re looking for something that follows the passage. We don’t need to think about the gaps. Our job is to figure out something that will follow from the passage. We need to take the passage as given, and then check what can be inferred.

Basically, we’re given that:
1. Rural households have more purchasing power than do urban or suburban households at the same income level 
 and that is because  
2. some of the income urban and suburban households use for food and shelter can be used by rural households for other needs.

We have to find what inference is best supported by this given information.

Answer choice analysis

A. The average rural household includes more people than does the average urban or suburban household. 
  Incorrect  . Is this something that must be true?
The reason for lower expenses could very well be that in rural households on average more people live together and thus their living expenses are lower. However, that doesn’t have to be the reason. For example, rural households could be spending less on food and shelter because food and shelter are cheaper in rural areas. So we cannot infer that the average household size is greater.

B. Rural households have lower food and housing costs than do either urban or suburban households. 
  Correct  . Yup! What we predicted.
Say non-rural households use $1000 for food and shelter. Rural households use some of that income for other needs. So, rural households do not use $1000 for food and shelter. They use a smaller amount. Essentially, rural households spend less on food and shelter than do non-rural households.

C. Suburban households generally have more purchasing power than do either rural or urban households. 
  Incorrect  . Incorrect for the following reasons:
 1. There is no distinction made between suburban and urban households.
2. The passage anyway states that rural households generally have more purchasing power than do either suburban or urban households at the same income level. So, the notion that suburban households generally have more purchasing power than do rural households anyway contradicts the passage and thus can’t be inferred.

D. The median income of urban and suburban households is generally higher than that of rural households. 
  Incorrect  . We do not learn anything about the distribution of income levels in the passage. We just learn that for households with the same income levels, rural households have a higher purchasing power. How do income levels compare? Which kinds of households have a higher median income? No idea.

E. All three types of households spend more of their income on food and housing than on all other purchases combined. 
  Incorrect  . We do not learn anything about how food and housing expenses compare with other expenses for any of these households.

Additional Notes

I recommend that you use your practice questions to develop and learn as much as you can about varied topics. For example, in case you are not clear about the precise definition of purchasing power, you could look up the definition through a quick Google search (after attempting the question). It might help you more clearly understand the question. Plus, it could help you beyond the GMAT too. So, win-win, no?

https://www.investopedia.com/terms/p/purchasingpower.asp

Abhishek009 · Answer

Prethink : Why doesn't Rural people doesn't bother about spending money on Food & Shltr : Might be it is cheap ,  They have abundance of food  , Shelter is not a matter of concern for them , etc...

Lets analyze the options -

A  The average rural household includes more people  than does the average urban or suburban household.

No of people is not the issue - Out of scope...

B  Rural households have lower food and housing costs  than do either urban or suburban households.

Closely matches with one of our line of thinking... Abundance of food can be a cause for less price of food, hence correct

C  Suburban households generally have more purchasing power  than do either rural or urban households.

We are told at the very outset -  " Rural households have more purchasing power than do urban or suburban households at the same income level "

So, this option is not correct...

D The  median income of urban and suburban households  is generally higher than that of rural households.

Same as option (D)

E   All three types of households  spend more of their income on food and housing than on all other purchases combined .

We do not have required data pertaining to the income and heads under which people in the three types of household spends their income, this is not correct....

Hence IMHO (B)

nazim391 · Answer

Frankly saying, I would categorize this question as Assumption question rather than Inference. Choice B gives a new information. There might be numerous reasons why rural people are left with more money over than that of urban and suburban people.

PrashantK0099 · Answer

clearly B because , rural house hold are spending less on food and shelter.

some of the income urban and suburban households use for food and shelter can be used by rural households for other needs.

CEdward · Answer

Rural households have more purchasing power than do urban or suburban households at the same income level, since some of the income urban and suburban households use for food and shelter can be used by rural households for other needs.

Which of the following inferences is best supported by the statement made above?

Which of the following inferences is best supported by the statement made above?

(A) The average rural household  includes more people  than does the average urban or suburban household.

Purchasing power is a measure of how much you would be able to buy with a dollar in your pocket. Sure it's true that in reality the purchasing power of households with more people in it exceeds a comparable household with fewer individuals. But, this doesn't HAVE TO be true. Suppose one wage earner simply earns a lot more than a few other people combined.

(B) Rural households have lower food and housing costs than do either urban or suburban households. Correct

(C)  Suburban households generally have more purchasing power than do either rural or urban households .
This directly contradicts the passage. Out.

(D) The  median income  of urban and suburban households is generally higher than that of rural households.
Plausible in reality? Yes again. But, this is not something that we could infer.

(E) All three types of households spend more of their income on food and housing than on  all other purchases combined   .

There's not an enumeration of all the types of purchases and how much is allocated to them in each type of household. Out.

egmat · Answer

The correct answer - B

Fairly easy question! Let us solve this one.

Passage 
For the same income level (i.e. for household income is the same)
- Rural households have more purchasing power than urban and sub-urban households
-  Reason for this:  Some of the income used for food and shelter in urban and sub-urban can be used for other purposes in rural homes

Question  
Inference

Prethinking 
As per the passage,  "Some of the income used for food and shelter in urban and sub-urban can be used for other purposes in rural homes"
 
This means that 
 Inference 1:   the total amount of money spent on food and shelter is lower in urban and sub-urban households, compared to urban and sub-urban homes.

Total food and housing costs for a household = average costs for these purposes/person * number of people in household

If the money spent on food and shelter is lower in rural, what could cause this?

- It may be because the same food and shelter costs more in urban and sub-urban (e.g. rent being costlier, vegetables and fruits being costlier etc.) - average costs per person being higher
- It may be because the average number of people is higher in urban and sub-urban homes (same costs/prices for above items, but more number of people - average number of people being higher

Inference 2:   The average costs of food and shelter per person may be lower for rural than they are for urban and suburban households (maybe, not will be) 
 Inference 3:   The average number of people per household may be lower for rural than they are for urban and suburban households (maybe, not will be)
 
let us now look at options.

Option Choice Analysis 
(A) The average rural household includes more people than does the average urban or suburban household.
All we know is that it "may be" true that average rural household has lesser people than the average urban or sub-urban household. Even in that case, we cannot be 100% sure. Option A is clearly something that cannot be inferred

(B) Rural households have lower food and housing costs than do either urban or suburban households. 
Correct. In line with our Inference 1. Rural homes do have lower food and housing costs compared to urban and sub-urban homes

(C) Suburban households generally have more purchasing power than do either rural or urban households.
The passage clearly says that rural households have more purchasing power than suburban households. This option goes against what is given, so incorrect

(D) The median income of urban and suburban households is generally higher than that of rural households.
Out of scope. The passage does not talk about income level, it only compares purchasing power, given the same income level.

(E) All three types of households spend more of their income on food and housing than on all other purchases combined.
Out of scope. The passage gives us no information to make such an inference. For all we know, food and housing may be only a small fraction, and education of children is the heaviest expense/purchase. Essentially, no information about this in the passage makes this a statement which is not inferrable.

Regards,
Harsha

sahuanamika · Answer

Rural households have more purchasing power than do urban or suburban households at the same income level, since some of the income urban and suburban households use for food and shelter can be used by rural households for other needs.

Which of the following inferences is best supported by the statement made above?

Inference : Rural households have more purchasing power as they spend less for food and shelter and use that money in other need as compared to urban or suburban households.

Choices :
(A) The average rural household includes more people than does the average urban or suburban household:
-- the paragraph does not talk about number of people , out of context.

(B) Rural households have lower food and housing costs than do either urban or suburban households.
-- This is correct and can be inferred from the paragraph.

(C) Suburban households generally have more purchasing power than do either rural or urban households.
-- This is telling exact opposite of what the paragraph is mentioning as per paragraph Rural have more purchasing power. So not correct.
 
(D) The median income of urban and suburban households is generally higher than that of rural households.
-- It is clearly mentioned that income is same for all the households, so not correct.

(E) All three types of households spend more of their income on food and housing than on all other purchases combined.
-- This is not correct as it is mentioned that what urban spend on food and shelter that money rural use on other purchases.

Ans is clearly B.

AnishPassi · Answer

You bring out an interesting point. Let alone whether answer choice B is an assumption,  given the above passage , can we not infer the statement?

Could you highlight another reason? I.e., is it possible that rural households do not spend less on food and shelter?

The passage:
Two sets of households are the same income level.
Yet, the author states that one set has more purchasing power.
Why?
Because some income used by the other set for food and shelter can be used by the first set for other needs.

How come? How come rural households can use some such income for other needs? They  must  be spending less on food and shelter.

Given all this, rural households' food and housing costs must be lower. No?

MatrtaCree · Answer

Purchasing power is a measure of how much you would be able to buy with a dollar in your pocket. Sure it's true that in reality the purchasing power of households with more people in it exceeds a comparable household with fewer individuals. But, this doesn't HAVE TO be true. Suppose one wage earner simply earns a lot more than a few other people combined.

Nsp10 · Answer

since some of the income urban and suburban households use   for food and shelter so this is the savings of rural hh, hence B

VerbalBot · Answer

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Rural households have more purchasing power than do urban or suburban

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Rural households have more purchasing power than do urban or suburban

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