Chap 15

Question 1

When fewer buyers are competing for a large supply of homes what type of market results?

A)
Highest and best use is in transition
 B)
Seller’s market
 C)
Buyer’s market
 D)
Vacancy rates are depleted

Answer 1

Explanation
The answer is buyer’s market. When the supply and demand equilibrium is upset by excess supply, a buyer’s market develops.

Question 2

Question ID: 794419
One person or a group of persons occupying a separate housing space is technically defined as a

A)
unit.
 B)
multiple ownership unit.
 C)
household.
 D)
family.

Answer 2

xplanation
The answer is household. A household, as defined by the U.S. Census Bureau, is any person or group of persons occupying a separate housing space.

Question 3

When the equilibrium of the real estate market is upset by excess demand,

A)
demand decreases.
 B)
a seller’s market exists.
 C)
a buyer’s market exists.
 D)
builder activity decreases in response to the need.

Answer 3

b. sellers marked exists

Question 4

The barometer of the real estate market is considered to be the

A)
number of housing starts.
 B)
cost and availability of credit.
 C)
change in consumer tastes.
 D)
change in consumer income.

Answer 4

Explanation
The answer is cost and availability of credit. The barometer of the real estate market is considered to be the cost and availability of credit.

Question 5

Which statement is FALSE regarding the relationship between price and demand?

A)
An increase in price causes an increase in demand.
B)
There is an inverse relationship between price and demand.
C)
An increase in price causes a decrease in demand.
D)
Decrease in price causes an increase in demand.

Answer 5

xplanation
The answer is an increase in price causes an increase in demand. An increase in price causes a decrease (not an increase) in demand.

Question 6

What is a building’s vacancy rate if 621 units are rented in a 690-unit building?

A)
75%
 B)
10%
 C)
25%
 D)
90%

Answer 6

Explanation
The answer is 10%. 690 total units – 621 rented units = 69 vacant units. 69 units ÷ 690 total units = .10 or 10% vacancy rate.

Question 7

There are 315 apartments rented in a 350-unit apartment building. What is the building’s occupancy rate?

A)
90%
 B)
75%
 C)
80%
 D)
95%

Answer 7

Explanation

The answer is 90%. 315 rented units ÷ 350 total units = .90 or 90% occupancy rate.

Question 8

Which data is the LEAST helpful as a real estate market indicator?

A)
Vacancy rate of rental units
 B)
Number of building permits issued
 C)
Number of houses sold and price levels
 D)
Zoning regulations

Answer 8

Explanation
The answer is zoning regulations. Good market indicators include data regarding price levels and building permits issued, vacancy rates, and sales volume.

Question 9

The land use that generates the MOST income to the land and improvements is called

A)
highest and best use.
 B)
economic use.
 C)
durability of land.
 D)
situs.

Answer 9

Explanation
The answer is highest and best use. The highest and best use of land is the use that generates the most return (income) to the land and improvements compared with alternative uses.

Question 10

What type of relationship is said to exist between price and supply?

A)
Positive
 B)
All of these
 C)
Inverse
 D)
Unrelated

Answer 10

Explanation
The answer is inverse. Price and supply are inversely (oppositely) related. When supply goes down, prices go up. When supply goes up, prices go down.

Question 11

Which characteristic does NOT describe the real estate market?

A)
Land is indestructible.

B)
The market is slow to respond to changes in supply and demand.

C)
The government uses indirect controls.

D)
Land is homogeneous.

Answer 11

Explanation

The answer is land is homogeneous. Real estate is heterogeneous; no two tracts of land are identical.