Chapter 15

Question 1

absorption

Answer 1

rate at which available
space in a real estate market
is leased or sold over a
specific period, indicating the
pace of demand relative to
supply

Question 2

base
employment

Answer 2

level of employment in
an economy that remains
relatively stable over time,
typically referring to
industries or occupations
that are essential and less
susceptible to cyclical
changes.

Question 3

cost

Answer 3

amount of money or
resources required to
produce, acquire, or
maintain a particular good or
service

Question 4

demand

Answer 4

quantity of a particular
good or service that
consumers are willing and
able to purchase at various
prices during a given period

Question 5

market

Answer 5

environment or system
where buyers and sellers
interact to exchange goods,
services, or resources,
allowing for the
determination of prices and
allocation of resources

Question 6

market
equilibrium

Answer 6

The point at which the
quantity of a good or service
supplied equals the quantity
demanded, resulting in a
stable price and quantity in
the market.

Question 7

price

Answer 7

The amount of money or
other resources that must be
given up to acquire a
particular good or service,
determined by the interaction
of supply and demand in the
market

Question 8

supply

Answer 8

The quantity of a particular
good or service that
producers are willing and
able to offer for sale at
various prices during a given
period

Question 9

total
employment

Answer 9

The overall level of
employment in an economy,
including both base
employment and jobs in
industries or occupations
that are more sensitive to
economic fluctuations.

Question 10

vacancy

Answer 10

The condition of a property
being unoccupied or
available for rent or sale,
often measured as a
percentage of total available
units in a market.

Question 11

value

Answer 11

The worth or utility of a
particular good or service, as
perceived by individuals or
society, often influenced by
factors such as scarcity,
utility, and desirability.

Question 12

A construction boom in a market is an indication that prices

Answer 12

have been increasing

Question 13

If a new company that sells its products worldwide moves into a town and hires 100 employees, it would be reasonable to expect

Answer 13

an increase in demand for all types of real estate

Question 14

The foremost factor contributing to commercial and residential demand in a market is

Answer 14

base employment

Question 15

If demand is increasing, what would be the likely effect on real estate prices in an area where the municipality has declared a moratorium on new construction?

Answer 15

Prices would rise

Question 16

Which of the following statements best describes the relationship between price and value in the market system?

Answer 16

Value is based on the interaction of underlying economic factors; price is a quantification of value in a transaction

Question 17

One of the economic characteristics that distinguishes real estate is

Answer 17

the uniqueness of every parcel

Question 18

Four principal determinants of value underlying the price for a product are

Answer 18

desire, utility, scarcity, and purchasing power

How much do I desire it? How useful is it? How scarce is it? Am I able to pay for it?

Question 19

Price is best described as

Answer 19

the amount of money a buyer and seller agree to exchange to complete a transaction

Question 20

During a time of declining vacancy in a real estate market, one would expect

Answer 20

rising prices

Question 21

A local government could stimulate the real estate market by

Answer 21

expanding the sewer system

Question 22

If commercial real estate rental prices are falling in a market, it is likely that

Answer 22

the market is over-supplied

Question 23

Which of the following is an important economic characteristic of real estate?

Answer 23

The demand must literally come to the supply

Question 24

If there is a significant undersupply of homes in a market, construction will tend to increase. This is an example of

Answer 24

the market tending toward equilibrium