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

Deidra-McCall on May 17, 2019

Please explain

For some reason, I'm having a hard time understanding the answer choice for this question. Could you please explain?

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Ravi on May 17, 2019


Great question. Let's take a look.

The stimulus tells us that a bunch of new apartments have been built
in Brewsterville. Usually, this would lower the rents for existing
apartments. However, in Brewsterville, the rents for existing
apartments went up.

We're looking for an answer that helps us explain this discrepancy.
The discrepancy we're searching for is between what is generally the
case and what happened in Brewsterville. Normally rents of existing
buildings fall, but in this case they rose. We need an answer that
provides us with an explanation that is about something specific about
Brewsterville that'd make its older apartments become more expensive
even after the new apartments were built.

(E) says, "The new apartments were constructed at the outset of a
trend of increasing numbers of people seeking residence in

Even if building new apartments generally reduces older apartment
buildings' rents, this may not have happened in Brewsterville because
more people, in general, were moving there. This answer choice helps
resolve the paradox because there are simply lots more people moving
to the town, which helps explain why rents in older buildings would
still be going up since demand is still increasing. Thus, (E) is the
correct answer choice.

Does this make sense? Let us know if you have any more questions!

Deidra-McCall on May 20, 2019

Yes it does. Thank you!