Chapter 19: The Real Estate Market (MC)

Question 1

The free enterprise system is best described as

a. market system
b. centralized system.
c. socialist system.
d. communist system.

Answer 1

a. market system

Question 2

Which statement does NOT apply to the real estate market?

a. Situs value is value resulting from location.
b. Real estate is immobile.
c. Each parcel of real estate is unique.
d. The real estate market is national in nature.

Answer 2

d. The real estate market is national in nature.

Question 3

How does the real estate market react to shifts in consumer demand?

a. rapidly
b. slowly
c. not at all
d. through changes in zoning laws

Answer 3

b. slowly

Question 4

The demand factors that affect real estate include

a. price, income, population, credit and consumer preferences.
b. price, income production cost and credit.
c. income, production cost, population and technological advances.
d. consumer preference, income and population.

Answer 4

a. price, income, population, credit and consumer preferences.

Question 5

In the real estate market, a developer is considered to be a

a. lender
b. competitor
c. consumer
d. supplier

Answer 5

d. supplier

Question 6

What does “increased productivity” relate to in relation to the supply of real estate?

a. more income per apartment
b. greater efficiency in the use of labor
c. greater output per builder
d. more unites per acre

Answer 6

b. greater efficiency in the use of labor

Question 7

The relationship between supply and demand in the real estate market is indicated by

a. the demand curve.
b. the capitalization rate.
c. population growth.
d. the vacancy ratio.

Answer 7

d. the vacancy ratio.

Question 8

What is the correct order of the phases of the business cycle?

a. expansion, trough, peak, contraction
b. peak contraction, through, expansion
c. expansion, peak, contraction, trough
d. trough, expansion, peak, contraction

Answer 8

c. expansion, peak, contraction, trough

Question 9

Market equilibrium is said to exist when

a. supply exceeds demand.
b. demand exceeds supply.
c. costs and prices stabilize.
d. supply and demand are in balance.

Answer 9

d. supply and demand are in balance.

Question 10

When estimating supply it is NOT necessary to consider

a. price
b. material costs
c. labor costs
d. productivity

Answer 10

a. price

Question 11

It has been determined that the value of three lots, each having a value of $10,000, would have a value of $50,000 as a single parcel. This illustrates the concept of

a. attachment
b. parceling
c. plottage
d. appreciation

Answer 11

c. plottage

Question 12

The relatively new phenomenon in which small families move into older neighborhoods, renovate the properties and displace poorer residents is called

a. putrefaction
b. gentrification
c. stabilization
d. blockbusting

Answer 12

b. gentrification

Question 13

What is the correct order in which the criteria for estimating highest and best use should be considered?

a. physically possible, legally permissible, maximally productive, economically feasible
b. legally permissible, economically feasible, maximally productive, physically possible
c. economically feasible, legally permissible, physically possible, maximally productive
d. legally permissible, physically possible, economically feasible, maximally productive

Answer 13

d. legally permissible, physically possible, economically feasible, maximally productive

Question 14

If a neighborhood appears to have an abundance of fore sale signs, and an unusually high number of rentals available, what might this indicate?

a. Neighborhood growth is continuing.
b. A period of revitalization has begun.
c. The neighborhood has entered a period of stability.
d. Decline in the neighborhood may be indicated.

Answer 14

d. Decline in the neighborhood may be indicated.

Question 15

Which external force affecting value is indicated by the number of vacancies in an area?

a. social
b. economic
c. governmental
d. environmental

Answer 15

b. economic