Practice Test Section 4 - Mod 10-12 Flashcards
Which principle states that the property with the lowest price attracts the greatest demand and widest distribution when several competing properties are available?
A. competition
B. contribution
C. increasing and decreasing returns
D. substitution
D. substitution
Four forces impact value. Employment levels, wage rates, and interest rates are examples of which force?
A. economic
B. environmental and geographic
C. governmental and legal
D. social
A. economic
Which principle states that real estate value is created and sustained when the characteristics of a property correspond to the demands of its market?
A. balance
B. conformity
C. externalities
D. highest and best use
B. conformity
The elements that create wealth, income, or services when they are combined are known as
A. agents of production.
B. forces that influence real estate value.
C. land and improvements.
D. surplus productivity.
A. agents of production.
A temporary use of a property until a different use becomes maximally productive is
A. conditional use.
B. excess use.
C. interim use.
D. nonconforming use.
C. interim use.
Zoning, public transportation, and sales taxes are examples of which of the four forces impacting value?
A. economic
B. environmental and geographic
C. governmental and legal
D. social
C. governmental and legal
Avery is beginning a highest and best use analysis of a property with existing improvements. What is the first analytical step Avery should perform?
A. an analysis of consistent use
B. an analysis of interim use
C. an analysis of the land as though vacant
D. an analysis of whether the property has excess land
C. an analysis of the land as though vacant
A small average residence is located in an area of luxury homes. The effect of the surrounding homes on the small residence is called
A. conformity.
B. excess profits.
C. progression.
D. regression
C. progression.
In an office market that has more available space than tenants willing to rent, what principle will affect pricing the most?
A. anticipation
B. competition
C. conformity
D. contribution
B. competition
Which theory states that land cannot be valued on the basis of one use while the improvements are valued on the basis of another use?
A. consistent use
B. interim use
C. uniform use
D. value in use
A. consistent use
An owner continues to make improvements to a property to the point where the value is no longer enhanced. What subgroup principle of balance does this illustrate?
A. contribution
B. increasing and decreasing returns
C. opportunity cost
D. surplus productivity
B. increasing and decreasing returns
Moderate profits attract healthy competition, but excess profits can lead to what?
A. decrease in demand
B. equilibrium
C. increase in supply
D. ruinous competition
D. ruinous competition
Which of the following could not be considered an interim use?
A. building in a warehouse district currently used as a religious facility
B. manufacturing business operating at 75% of its normal production
C. rural tract of land farmed while awaiting subdivision approval
D. vacant downtown commercial land used for surface parking
B. manufacturing business operating at 75% of its normal production
Ellis built his residence on two lots in a manner that makes it impossible to subdivide the land. The land site situation that Ellis has is an example of what?
A. excess land
B. opportunity cost
C. surplus land
D. surplus productivity
C. surplus land
Which of the following is not a test of highest and best use? A. environmental viability B. legal permissibility C. maximum productivity D. physical possibility
A. environmental viability
