Logical Reasoning

PT151 · S4 · Q6 The construction of new apartments

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The construction of new apartments in Brewsterville increased the supply of available housing there.

Given that ...

The new apartments in B-ville increased the supply of available housing, and that increasing the supply of available housing usually leads to lower rents for existing apartments.

How can it be that ...

Since these new apartments were built, the rents for existing apartments rose.

Evaluate / Goal

It's hard to anticipate why these new apartments were an exception to the general trend. We either want an answer that connects with these new apartments and gives us a way to explain increasing rents.

Or we want an answer that just tells us something else that's changed during the same timeframe that would explain increased rents. The stimulus did provide us with one mechanism for explaining rent increases (a decrease in the supply of available housing).

Maybe an answer will show us how the new apartments counterintuitively caused a decrease in the supply of available housing.

6.

Which one of the following, if true, most helps to explain the discrepancy described above?

  1. Fewer new apartments were constructed

    No Impact

    Even if it's fewer new apartments than planned, the ones they did build are still increasing the supply of available housing, so we would still expect rents to stay put or go lower. This doesn't give us any way to explain a rent increase.

    6% picked this

  2. The new apartments were much

    No Impact

    The newer apartments, being more desirable, would likely have higher rents than the existing apartments, which are less desirable. But we need to explain why rents for existing apartments went up, so this isn't doing anything for us.

    5% picked this

  3. Rents in some areas close

    Unrelated to Goal

    We need to explain why rents for existing apartments in Brewsterville went up. This is telling us that rents in areas outside of Brewsterville when down. Does that give us some causal story? Why would rents in areas outside of Brewsterville going down cause rents for existing apartments inside Brewsterville to go up?

    1% picked this

  4. A sizeable number of people

    Deepens Paradox

    If a bunch of people moved out of the existing apartments, then that would increase the supply of available housing in these existing apartment buildings, which should theoretically bring down the price of rent there (or at worst, it shouldn't go up).

    4% picked this

  5. Correct

    The new apartments were constructed

    Why this is right

    This is saying that, simultaneous with the building of these new apartments, there was an influx of more people trying to find housing in Brewsterville. LSAC always expects us to know how supply / demand works. Low supply or high demand makes prices go up. High supply or low demands makes prices go down. This is telling us that there was increased demand for apartments (more people seeking residence), so that can help explain why the rents for apartments went up.

    Skill tested: Paradox · how this choice captures the argument's function is the move to repeat next time.

    84% picked this

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