The following appeared in a memo from the president of a company that builds and sells new homes in Steel City.

“Over the past five years, the population of Steel City has increased by more than 20 percent, and family incomes in Steel City have risen much faster than the national average. Nationwide, sales of houses priced above $150,000 have increased more than have sales of lower-priced houses. Such data indicate that we should make changes in our business to increase company profits. First, we should build fewer low-priced houses than we did last year and focus instead on building houses designed to sell at above $150,000. Second, we should hire additional workers so that we can build a larger total number of houses than we did last year.”

The president of a company that deals in building and selling homes in Steel City recommends that they should take two major steps in order to increase the company’s profits. The first is that they should build a lesser number of lower priced houses and concentrate on building houses that cost more than $150,000. The second step is that the company should hire additional workers to facilitate building more houses than they built last year. The arguer provides evidence in support of the claim that these two steps would lead to an increase in the company’s profits. The first is that both the population and the family incomes in Steel City have increased over the last five years. The second is that the sales of houses priced above $150,000 have increased across the nation. However, there are several fallacies that render the recommendation made by the arguer indefensible.

An increase in the population does not necessarily mean that a higher number of Steel City residents would be willing to buy expensive houses. It is likely that people may move to other cities in search of jobs and they may not be interested in buying new homes in Steel City. On the other hand, it is likely that this increase in population is due to the retired people who are coming back to settle down in their native city. They may already be having their parental houses or they may not be interested in buying expensive houses for a small family. Additionally, it is possible that the increase in population is because of new industries coming up and the people working in such industries are coming from the neighboring cities and so they may be interested in living in rented rooms only.

The arguer makes an unfair assumption where he presumes that the people would be willing to buy expensive houses just because they now have higher family incomes. It is likely that the people who fall in the high income bracket may be having small families and they may not be interested in investing money in expensive houses that are too big for their families. Additionally, it is possible that these people already have homes and therefore, they may not be interested in buying new homes.

The contention that a nationwide increase in the demand for houses priced above $150,000 means that there is a similar demand in Steel City as well, seems far-fetched. It is likely that the nationwide survey had included the metros and big cities where the people can afford high priced houses. The same cannot be said about Steel City. It is likely that the people in Steel City do not earn as much as the national averages and therefore, they might be interested in buying houses that are cheaper.

Even if we assume that there is a demand for buying high priced houses in Steel City, there is no justification for hiring additional workers for building more houses as compared to those that were built last year. The cost of hiring additional workers and building more homes will require financial investments and it may be difficult for the company to recover these expenses if they fail to sell off the houses. Therefore, it is not necessary that this step would lead to increased profits for the company.

The line of reasoning discussed above makes it apparent that the arguer has failed to provide a valid justification for building more high priced houses. The argument could have been substantiated with evidence that proved that the average resident of Steel City will be able to afford a house priced above $150,000 and that he would actually be interested in buying one. Moreover, there is a requirement of the statistics related to the cost involved in hiring additional workers and building more homes to prove that this would lead to an increase in the company’s profits.