Question

location A location B 5% 4% 6% 3% 5% 5% 3% 4% 2% 3% 1% 2% 2% 0% 1% 0% - 1% -3% -1% -3% 2003 2004 2005 2006 2003 2004 2005 2006 Graphs above present the percentage change of the costs in locations A and B in years 2003-2006. The number for a particular year presents for how much the rent increased in the comparison to previous year. Question Answer The highest percentage increase was in 2003 in location B. Y N Starting from 2004 the cost of rent in location B had been decreasing from year to year Y N At the beginning of 2004 rent increased by 3% in comparison to 2003, while at the beginning of 2005 rent decreased by 3% YtY. Was Y N the cast for 2003 higher than for 2005?? Sum of costs for location A and B was higher in 2006 than in 2003 Y N

Please answer each Yes or No question and provide a brief explanation.

Answer 1

a) The highest percentage increase is when we look at only the positive percentages here. We see for location A here, the percentage changes as: 2%, 3%, -3% and 4%, therefore the highest increase here is 4% in the last year. Similarly for B the highest percentage increase is 5% in the first year. As 5% > 4%, therefore the highest percentage increase was in 2003 in location B. therefore Yes is the correct answer here.

b) Starting from 2004, for location B, the percentage changes here are given as: 4%, 2% and -1%. Therefore the given statement is False here No is the correct answer here.

c) The total increase here is computed as:
(1 + 0.03)*(1 - 0.03) = 1.03*0.97 = 0.9991

Therefore cost for 2003 is higher than for 2005 here. Therefore Yes is the correct answer here.

d) For Location A, we have here:
= (1 + 0.03)*(1 - 0.03)*(1 + 0.04) > 1

For Location B, we have here:
= (1 + 0.04)(1 + 0.02)*(1 - 0.01) > 1

Therefore sum of costs is higher in 2006. Therefore Yes is the correct answer here.