Question 1

The broad forces affecting value are physical, social, economic and political in nature.

Accepted Answer

This statement is true. Physical factors may include geographical location, climate, and natural resources; social factors may include cultural norms and demographics; economic factors may include market competition and supply/demand dynamics; political factors may include government policies and regulations. All these factors can impact the value of goods and services.

Question 2

Disposable income is the amount of family income available after paying rent or other housing costs.

Accepted Answer

Disposable income is the amount of income available after deducting taxes and other mandatory expenses, not just housing costs.

Question 3

The principle of substitution is basic to all three approaches to value.

Accepted Answer

The principle of substitution is fundamental to all three approaches to value, be it the sales comparison approach, cost approach or income approach.

Question 4

Zoning is one of the economic forces affecting value.

Accepted Answer

The answer of Zoning is one of the economic forces...

Question 5

Environmental protection and subdivision reform laws affect the availability and cost of vacant land.

Accepted Answer

Environmental protection laws can restrict development on certain lands, making them unavailable for subdivision and potentially increasing the cost of available vacant land. Subdivision reform laws can also affect the availability and cost of vacant land by changing regulations for creating new subdivisions.

Question 6

The agents of production are responsible for both tangible and intangible benefits of real estate.

Accepted Answer

The agents of production, such as land, labor, capital, and entrepreneurship, are responsible for creating both tangible benefits, such as buildings and infrastructure, and intangible benefits, such as the location and accessibility of the property, that contribute to the value of real estate.

Question 7

The principle of highest and best use suggests that land must always be valued in its&#10;present use.

Accepted Answer

The principle of highest and best use suggests that land must be valued in the use that will produce the highest value, regardless of its current use.

Question 8

Demand and scarcity are both essential elements of value.

Accepted Answer

Both demand and scarcity contribute to the value of goods and services. Demand refers to the desire for a good or service, which increases its value if the supply is limited. Scarcity, on the other hand, refers to the limited availability of a resource, which also increases its value by making it more desirable. Therefore, both demand and scarcity are essential elements that contribute to the value of a product.

Question 9

A strong demand can be effective without purchasing power.

Accepted Answer

Demand in economic terms not only involves the desire for a product or service but also the purchasing power to acquire it. Without purchasing power, the desire does not translate into effective demand in the market.

Question 10

High valued properties are not generally affected by the proximity of lower valued ones.

Accepted Answer

The proximity of lower valued properties can have an impact on high valued properties. For example, if a nearby property is poorly maintained or has a negative reputation, it can decrease the value of surrounding properties. Additionally, if a lower valued property sits on a large piece of land, there may be potential for development or re-zoning which could impact the high valued properties in the area.

Deck 5: Real Estate Economics and Value