Ch 9 Quiz Real Property Markets

Question 1

True or False? Real property is typically purchased with cash.

Answer 1

FALSE

Question 2

“A set of arrangements in which buyers and sellers are brought together through the price mechanism; the aggregate of possible buyers and sellers and the transactions between them” is the definition of

Answer 2

market

Question 3

“The area associated with a subject property that contains its direct competition” is the definition of a

Answer 3

market area

Question 4

“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural” is the definition of

Answer 4

district

Question 5

All the following are characteristics of a good market EXCEPT

Answer 5

small number of buyers and sellers

Question 6

All of the following would be participants in the real property market

Answer 6

• Buyers
• Sellers
• Landlords
• Tenants
• Real estate agents
• Appraisers
• Mortgage officers
• Underwriters
• Title company officials
• Attorneys
• Surveyors
• Home inspectors
• Engineers
• Developers

Question 7

“A market in which a drop in demand is accompanied by a relative oversupply and a decline in prices” is the definition of a(n) ____________ market.

Answer 7

depressed

Question 8

True or False? A farmer’s market is an example of a market at work.

Answer 8

TRUE

Question 9

The principle of supply and demand states, in part, that the price of real property varies directly with ________ and inversely with __________.

Answer 9

demand, supply

Question 10

All the following are characteristics of a good market

Answer 10

• Homogeneous products
• Prices are relatively low
• Prices are stable
• Products are easily transportable
• Organized market mechanism
• A large number of buyers and sellers
• Buyers and sellers are knowledgeable
• Buyers and sellers act rationally
• Little regulation or government intervention
• Supply and demand operate freely

Question 11

Which type of market is MOST likely to be characterized by higher prices and a shortage of homes for sale?

Answer 11

seller’s market

Question 12

“A market characterized by numerous transactions.” is the definition of a(n) _________ market.

Answer 12

active

Question 13

Which would NOT be an example of strong demand in a real property market?

Answer 13

decreasing building starts

Question 14

Which of these would be considered the most INEFFICIENT market?

Answer 14

the real property market

Question 15

Real property is unique as an economic good in that it is

Answer 15

immovable

Question 16

When supply and demand are out of balance, they tend to move towards

Answer 16

equilibrium

Question 17

In real property, a market is defined in terms of

Answer 17

competition. Market Boundaries. A market is an area in which properties are located that would be truly comparable or competitive in the mind of a typical purchaser.

Question 18

A real estate market is defined in terms of __________.

Answer 18

competition

Question 19

Which would NOT be an example of a homogenous product?

Answer 19

a building lot

Question 20

In a real property market, which factor of the supply and demand equation is dynamic and subject to immediate change?

Answer 20

demand

Question 21

“An active market in which the sellers of available properties can obtain higher prices than those obtainable in the immediately preceding period; a market in which a few available properties are demanded at prevailing prices by many users and potential users” is the definition of a(n) __________ market.

Answer 21

seller’s

Question 22

A neighborhood consists of ____________ land uses, while a district consists of __________ land uses.

Answer 22

complementary, homogeneous

Question 23

“The area associated with a subject property that contains its direct competition” is the definition of

Answer 23

market area

Question 24

True or False? The principle of supply and demand applies to consumer goods and services, but not real property.

Answer 24

FALSE

Question 25

“A market in which product differentiation exists, there is a lack of important product or market information, and some of the producers and/or consumers are significant enough to affect the price and quantity of goods by their actions alone” is the definition of a(n) ____________ market.

Answer 25

imperfect

Question 26

Which is usually larger?

Answer 26

market area

Question 27

Which would NOT be an example of strong demand in a real property market?

Answer 27

decreasing building starts

Question 28

What is the supply of real estate in a market?

Answer 28

the existing stock of parcels of real estate

Question 29

The principle of supply and demand states that the price of a commodity varies ________ with demand.

Answer 29

directly. Supply and demand is defined as “In economic theory, the principle that states that the price of a commodity, good, or service varies directly, but not necessarily proportionately, with demand, and inversely, but not necessarily proportionately, with supply. In a real estate appraisal context, the principle of supply and demand states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply.”