The question reads as " In the last year, real estate prices, such as those for houses and condominiums,.."

I went through the explanation, however, not convinced on the following:

If there was actually an increase in both cities, then why is answer choice using the word "decreased" for Galway? Its not really a decrease but a small increment.

Thanks

because the RATIO of rents to prices actually HAS decreased. it is possible for two numbers both to increase but the ratio fall, if the denominator increased a greater percentage..

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Tim Sanders
Manhattan GMAT Instructor

I tried the math, dint work.

Eg. 8/2 vs 4/7

We still need an older ration to see the trend. Ie. I need to compare the DECREASE to an OLDER RATIO.

Please advice

To make things easier, let's recap what the argument says:

In the last year, two things have happened:
1) real estate prices have gone up 7% in Galway but 2% in Tuam
2) average apartment rents have gone up 4% in Galway but 8% in Tuam.

We are asked to make an inference from these facts.

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

Let's make up some numbers that match the information given in this problem to see how this answer can be correct.

Let's say that last year the average Galway rent was $100 and average Galway real estate price was $1000. The ratio would be 100:1000 or 1:10, which is expressed mathematically as 1/10.

This year the average Galway rent would be $104 and real estate price $1070. We can look at this ratio, 104:1070 and see that it will be LESS than 1/10. Thus, the Galway average rent to average real estate price has decreased.

Let's do the same with Tuam:
Average rent was also $100 and real estate was $1000 last year, or 1/10.

This year rent would be $108 and real estate would be $1020. We can look at this ratio, 108/1020, and see that it is GREATER than 1/10. Thus, the Tuam average rent to average real estate price ratio has increased.

The summary of all of this is exactly what answer choice A) says.

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Jamie Nelson
ManhattanGMAT Instructor