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The average fee charged by high-street estate agents to homeowners for selling property is 1.3% of the final sale price - Edexcel - A-Level Economics A - Question 3 - 2018 - Paper 1
Question 3
The average fee charged by high-street estate agents to homeowners for selling property is 1.3% of the final sale price. (a) Assume the selling fee is 1.3%. Calcula... show full transcript
Worked Solution & Example Answer:The average fee charged by high-street estate agents to homeowners for selling property is 1.3% of the final sale price - Edexcel - A-Level Economics A - Question 3 - 2018 - Paper 1
Step 1
Calculate the payment received by an estate agent on a property sold for £489 000
Answer
To calculate the estate agent's fee, we use the following formula:
[ \text{Fee} = \frac{1.3}{100} \times 489,000 ]
Calculating this gives:
[ \text{Fee} = 0.013 \times 489,000 = 6,357 ]
Therefore, the payment received by the estate agent is £6,357.
Step 2
The ratio of the average house price in London to the average house price in the North East of England is:
Answer
To find the ratio, we use the average house prices:
[ \text{Ratio} = \frac{\text{Average House Price in London}}{\text{Average House Price in North East}} = \frac{489,000}{127,000} \approx 3.85 ]
Thus, the correct answer is C.
Step 3
Explain one likely reason for the difference in average house prices between London and the North East of England.
Answer
One likely reason for the difference in average house prices is the differences in average income or wealth. London generally has a higher average income which allows residents to obtain larger mortgages. This allows them to pay higher prices for properties compared to those in the North East, where average incomes may be lower. Consequently, this impacts the demand and prices of housing in these areas.