Highest & Best Use McKissock Exam Questions with 100% Complete Solutions

Which of these is NOT one of the four agents of production? Entreprenuerial coordination Materials Capital Labor - Materials What are the four agents of production? - Land, Labor, Capital, Entrepreneurial Coordination What entity is considered the authority on determining when the U.S. economy is in a recession? - National Bureau of Economic Research What is an early indicator of a declining market? - Rising vacancy rates How many quarters for a recession? - Two What is a major cause of inefficient markets, especially relating to real estate? - Information asymmetry At which stage in the real estate cycle does competition among sellers increase, resulting in a decrease in profits? - Contraction What is the term for the process that defines and subdivides a large homogenous market based on location, demographics, and consumer behavior? - Market Segmentation At which stage of the real estate cycle does the federal government often lower interest rates to maintain construction levels? - Recession Which of these would NOT be considered specific data? - Market area boundaries What is specific data? - Data that relates directly to the subject A developer is constructing a high-end luxury apartment building. While the building is under construction, the major employer in the area consolidates its operations and moves most of its executives out of state. When the building opens, occupancy reaches 40% and remains at that level. This would be an example of _____________ forces that affect real estate. - Economic What is one of the reasons why real estate is an inefficient market? - Properties are not easily or quickly produced Which statement is TRUE regarding the process of developing a parcel of real property? - Because of the large dollar amounts involved, these are not simple transactions In a market analysis, an appraiser examines trends and: - Motivations of market participants Before researching the market, an appraiser must - Identify the subjects market area Market segmentation defines and subdivides a large homogenous market into segments based on - Location, demographics, and consumer behavior Barry owes $8,000 on his credit card, and he carries this balance from month to month. This is considered to be: - Consumer debt Because of the high price of real estate: - Most purchasers must use debt financing What type of analysis defines the geographic demand for a specific property? - Market deliniation A buyer and a seller are engaging in a real estate transaction. The seller is more knowledgeable about the property and the market than the buyer. This is an example of: - Information asymmetry What type of corporation invests in real estate, pays no corporate taxes, and distributes 90% of the income to investors? - REIT Which principle applies equally to residential and commercial properties? - Substitution In Mapletown, there are only three homebuilders who control the entire market for new home construction. This is an example of: - Oligopoly What is the difference between monopoly and oligopoly? - Monopoly is no competition, oligopoly is little competition A building owner installs a new "green" roof on the structure at a cost of $300,000. The value of the building increases by only $200,000 as a result of the new roof. This demonstrates: - Contribution What is contribution - Contribution holds that the value of a particular component of a property is dependent upon its contribution to the value of the entire property.