A market analysis shows the following quarterly absorption rates for condominiums: Q1: 45 units, Q2: 52 units, Q3: 38 units, Q4: 41 units. What is the average quarterly absorption rate?
Correct Answer
B) 44 units per quarter
Total 45+52+38+41=176 units; mean 176/4=44 units/quarter. Use the same population, period and price/listing definition throughout. Common errors: reporting the annual total instead of the quarterly average gives 176 units per quarter; dividing by 3 instead of 4 gives 59 units per quarter; reporting a monthly average instead of quarterly gives 15 units per quarter.
Why This Is the Correct Answer
Option B is correct because total absorption is 45 + 52 + 38 + 41 = 176 units, and 176 / 4 quarters = 44 units per quarter. The average is stated in the same period unit as the data, quarters.
Why the Other Options Are Wrong
Option A: 15 units per quarter
Option A is wrong because 15 units per quarter comes from computing a monthly average, 176 / 12 = about 15, and labeling it quarterly. The quarterly average is 176 / 4 = 44 units.
Option C: 59 units per quarter
Option C is wrong because 59 units per quarter comes from dividing by 3 instead of 4: 176 / 3 = about 59. There are four quarters, so the average is 176 / 4 = 44 units.
Option D: 176 units per quarter
Option D is wrong because 176 units per quarter is the annual total, 45 + 52 + 38 + 41 = 176, not a quarterly average. Dividing by four quarters gives 44 units per quarter.
Sum, then divide by periods
Add up all the periods, then divide by how many periods there are, keeping the same unit of time.
How to use: Use this for any average-per-period absorption or sales question.
Exam Tip
Check the time unit in the answer: an annual total or a monthly figure labeled per quarter is a trap.
Common Mistakes to Avoid
- -Reporting the annual total as a quarterly rate
- -Dividing by the wrong number of periods
- -Mixing monthly and quarterly units
Concept Deep Dive
Analysis
This question tests averaging absorption over periods. Add the four quarterly absorption figures and divide by the number of quarters to get the average per quarter.
Background Knowledge
Absorption rate measures how quickly units are sold or leased in a market over a given period. Averaging several periods smooths short-term swings and gives a pace that can be used to estimate how long inventory would take to absorb. The period unit of the result must match the unit used for the data.
Real-World Application
An appraiser valuing a condominium unit reviews a year of project sales: 45, 52, 38 and 41 units by quarter. The average of 44 units per quarter helps the appraiser estimate how long remaining unsold units may take to sell.
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