p.3
Supply and Demand Dynamics
What are Giffen goods?
Inferior goods for which demand increases as the price increases.
p.5
Marshallian Cross and Market Equilibrium
What occurs after demand decreases in the supply and demand cycle?
Supply decreases and eventually the price decreases.
p.3
Supply and Demand Dynamics
Give examples of Veblen goods.
Luxury cars, clothing, and watches.
p.14
Price, Value, and Cost in Real Estate
What additional expenses are included in the COST of real estate?
Any form of taxation or other expenses.
p.9
Cross Elasticity of Demand
What is the effect of an increase in the price of urban housing on rural housing demand?
It leads to an increase in the demand for rural housing.
p.3
Supply and Demand Dynamics
What is a key assumption about Giffen goods?
Consumers must spend a large portion of their income on these goods.
p.5
Marshallian Cross and Market Equilibrium
What is the first step in the vicious cycle of supply and demand?
To meet increasing demand, supply is increased and the price of the product is also increased.
p.7
Factors Influencing Housing Demand
What factors can shift housing demand and supply curves?
Factors other than price, such as income, recession, and external market values.
p.6
Supply and Demand Dynamics
What are the reasons for changes in demand and supply?
Substitution Effect, Income Effect, and Law of Diminishing Marginal Utility.
p.14
Price, Value, and Cost in Real Estate
How can monthly rent be classified in terms of real estate?
As a form of price paid by a tenant to the owner of a house.
p.7
Factors Influencing Housing Demand
What are some key factors that influence housing demand?
Size of the house, location, number of rooms, features like a garden, investment purpose, and market value.
p.14
Price, Value, and Cost in Real Estate
What does VALUE represent in real estate?
A measure of what the property is worth to the owner, tenant, or society.
p.3
Supply and Demand Dynamics
What are Veblen goods?
Goods for which higher prices are paid to signal wealth rather than for better quality.
p.6
Government Policies on Housing Supply
What are some external factors that can affect demand and supply?
Government regulating prices, development control regulations, and other policies affecting price.
p.3
Supply and Demand Dynamics
Give an example of Giffen goods.
Bread, onions, and housing stock.
p.6
Supply and Demand Dynamics
Who are the main sellers in the market?
Individuals, government, and others.
p.8
Housing Supply and Construction Responses
What are some reasons for increased housing supply from new construction?
Higher prices, increased production, and high vacancy rates in existing stock.
p.14
Price, Value, and Cost in Real Estate
What is the definition of market PRICE in real estate?
The sum of money for which a dwelling unit or land is exchanged between buyer and seller.
p.12
Methods of Property Valuation
What is the Residual Valuation Approach?
A method to ascertain the maximum amount house-builders are willing to pay for land by calculating expected revenues from house sales minus expected non-land costs.
p.2
Supply and Demand Dynamics
Why might increasing supply not lead to increased profit?
Because increasing supply requires a lot of extra investment.
p.7
Factors Influencing Housing Demand
What is the expected trend in housing demand as household incomes increase?
The demand for housing is expected to increase.
p.13
Housing Supply and Construction Responses
What happens to the supply of land at higher prices?
More land will be offered for housebuilding in the absence of controls.
p.11
Government Policies on Housing Supply
What does the government do to directly supply the quantity of housing needed?
It can directly supply the balance demand (Qn - Q0) with the help of various agencies.
p.10
Supply and Demand Dynamics
In the context of rented housing, what does the price represent?
The rental payment for housing.
p.1
Basics of Computation and Data Analysis
What does Pareto Efficiency mean?
A situation where resources are allocated in the most efficient manner, and no one can be made better off without making someone else worse off.
p.6
Supply and Demand Dynamics
What does mainstream economics suggest about prices without external factors?
Prices only reflect the decisions of buyers and sellers.
p.6
Supply and Demand Dynamics
What roles do buyers and sellers play in the market?
Buyers create demand, and sellers create supply.
p.14
Price, Value, and Cost in Real Estate
What is the definition of COST in the context of real estate?
The amount incurred for the production of dwelling units, including land, labor, materials, and finance.
p.10
Supply and Demand Dynamics
What is a potential reason for a shift in the supply curve in housing?
A sudden surge in willingness of individuals to sell houses or housebuilders finding ways to develop more houses.
p.15
Methods of Property Valuation
What is the Direct Comparison method in property valuation?
It involves comparing the capital value of similar properties.
p.1
Supply and Demand Dynamics
What is Supply in economic terms?
The total amount of a good or service that producers are willing to sell at various prices.
p.6
Supply and Demand Dynamics
Who are the main buyers in the market?
Builders and individuals.
p.5
Marshallian Cross and Market Equilibrium
What happens to demand when the price of a commodity increases?
The demand for the commodity decreases.
p.2
Supply and Demand Dynamics
What is one reason to increase the price of a commodity?
To reduce the overall demand.
p.12
Supply and Demand Dynamics
Why might builders be willing to pay higher prices for expensive plots of land?
Because such houses add to exotic value and generate high revenue.
p.9
Cross Elasticity of Demand
How are urban housing and rural housing classified in terms of elasticity?
They are considered substitute goods.
p.15
Methods of Property Valuation
What happens during compulsory acquisition of property?
Compensation is paid to the owner.
p.11
Supply and Demand Dynamics
What do D0 and S0 represent in the context of housing?
They represent the demand and supply curves for Decent Housing.
p.10
Supply and Demand Dynamics
What are the initial conditions represented by D0, S0, P0, and Q0?
Initial demand, supply, equilibrium price, and equilibrium quantity.
p.3
Supply and Demand Dynamics
What happens to price and demand when price increases?
Both price and demand increase.
p.8
Price Elasticity of Demand and Supply
How sensitive is the supply from existing housing stock to price changes?
It is highly unlikely that supply from the existing stock is very sensitive to price changes.
p.14
Price, Value, and Cost in Real Estate
Why can assessing VALUE be challenging?
Because it can be difficult to express in precise monetary terms.
p.13
Housing Supply and Construction Responses
How does the price of land affect its stock?
Change in price does not impact the available stock of land.
p.8
Supply and Demand Dynamics
What happens when housing prices increase?
It can lead to probable reasons for selling and increased production.
p.13
Housing Supply and Construction Responses
How does the supply of land differ from the stock of land?
Supply is a flow that varies with time, while stock is a fixed quantity.
p.1
Basics of Computation and Data Analysis
What is the Inflation Rate?
The rate at which the general level of prices for goods and services rises, eroding purchasing power.
p.15
Methods of Property Valuation
What does valuation based on profit consider?
It assesses the potential income generated by the property.
p.1
Price Elasticity of Demand and Supply
What is Price Elasticity of Demand?
A measure of how much the quantity demanded of a good responds to a change in the price of that good.
p.8
Housing Supply and Construction Responses
What factors influence housing supply from builders?
The structure of the house-building industry and the willingness and ability of builders to change output volume and composition.
p.8
Price Elasticity of Demand and Supply
What primarily affects the price elasticity of supply for new construction housing?
The ability of the house-building industry to respond to higher prices.
p.7
Factors Influencing Housing Demand
What three aspects impact housing demand?
Ability to purchase, willingness, and financial resources.
p.9
Cross Elasticity of Demand
How are transport and rural housing classified in terms of elasticity?
They are considered complementary goods.
p.8
Housing Supply and Construction Responses
What is a potential outcome of constructing housing not being very profitable?
It may lead to a shift in demand towards existing stock.
p.11
Government Policies on Housing Supply
What is one way the government can increase demand for Decent Housing?
By providing housing allowances, technological support, or loan subsidies.
p.10
Supply and Demand Dynamics
What causes a shift in the demand curve from D0 to D1?
A sudden surge in willingness to buy more houses due to an increase in income or increased demand to live in a particular area.
p.15
Methods of Property Valuation
What does the Depreciation method of valuation account for?
It considers the decrease in property value over time.
p.12
Supply and Demand Dynamics
What factors influence the maximum amount customers are willing to pay for land?
The overall demand for housing and expected revenues from house sales.
p.9
Cross Elasticity of Demand
What happens to the demand for rural housing when transport costs fall?
The demand for rural housing increases.
p.7
Factors Influencing Housing Demand
How does income elasticity of demand affect housing demand?
Individuals demand more and better quality housing at higher incomes compared to lower incomes.
p.12
Supply and Demand Dynamics
How does high demand for housing affect land prices?
It increases the price of individual dwelling units, leading builders to pay higher land rates.
p.9
Cross Elasticity of Demand
What does a negative value in Cross Elasticity of Demand indicate?
It indicates complementary goods.
p.10
Supply and Demand Dynamics
What happens to the equilibrium price when the demand curve shifts to the right?
The equilibrium price increases to P2.
p.1
Marshallian Cross and Market Equilibrium
What does Equilibrium of Demand & Supply refer to?
The point where the quantity demanded equals the quantity supplied.
p.13
Housing Supply and Construction Responses
What is the stock of land?
A fixed quantity of geographic territory that can only change through reclamation or submersion.
p.15
Methods of Property Valuation
What is one purpose of property valuation?
To assess the value when buying or selling property.
p.12
Factors Influencing Housing Demand
What are the two major governing factors for plots in high-density zones?
High demand for housing and the high number of dwellings that can be constructed on the same piece of land.
p.9
Cross Elasticity of Demand
What is the formula for Cross Elasticity of Demand?
Cross Elasticity of Demand = % change in quantity demanded / % change in price of another good.
p.9
Cross Elasticity of Demand
What does a positive value in Cross Elasticity of Demand indicate?
It indicates substitute goods.
p.1
Supply and Demand Dynamics
What is meant by Demand in economics?
The quantity of a good or service that consumers are willing and able to purchase at various prices.
p.8
Supply and Demand Dynamics
What can lead to less supply in the housing market?
Less demand leading to less supply, and the expectation of less future profit compared to present profits.
p.13
Housing Supply and Construction Responses
What is the supply of land?
A measure of the flow of land available to the market, which varies over time.
p.2
Supply and Demand Dynamics
What is a saturation point in the context of demand?
A point where many people who could previously afford the product can no longer afford it.
p.1
Basics of Computation and Data Analysis
What is Net Present Value (NPV)?
The difference between the present value of cash inflows and outflows over a period of time.
p.11
Government Policies on Housing Supply
What approach do governments usually take to address housing needs?
They typically use a combination of increasing demand, increasing supply, and direct provision.
p.1
Basics of Computation and Data Analysis
What is Nash Equilibrium?
A situation in a game where no player can benefit by changing their strategy while the other players keep theirs unchanged.
p.5
Marshallian Cross and Market Equilibrium
What does the Marshallian Cross graph illustrate?
The relationship between supply and demand.
p.14
Price, Value, and Cost in Real Estate
What role does VALUE play in land and housing finance?
It plays a very important role toward finance in land and housing.
p.2
Supply and Demand Dynamics
What is one reason consumers may look for alternatives when prices rise?
They start preferring alternatives at lower prices.
p.11
Government Policies on Housing Supply
How can the government increase the supply of Decent Housing?
By making more land available or providing subsidies and tax concessions to builders.
p.11
Marshallian Cross and Market Equilibrium
At what point is the quantity Q0 considered to be in equilibrium?
At point E, where the demand and supply curves intersect.
p.1
Price, Value, and Cost in Real Estate
What is Production Surplus?
The difference between the amount producers are willing to accept for a good and the actual price they receive.
p.12
Methods of Property Valuation
What does residual value represent in real estate?
Expected revenues from house sales minus expected costs of all inputs other than land.
p.15
Methods of Property Valuation
How is property valuation used in taxation?
To assess the tax of a property, such as municipal tax or property tax.
p.11
Government Policies on Housing Supply
What is the goal of government policies regarding housing?
To provide Decent Housing for All by eliminating the gap between Q0 and Qn.
p.13
Housing Supply and Construction Responses
What is the impact of Development Control Regulations (DCR) on land?
DCR impacts the price of land, which in turn affects the supply.
p.1
Basics of Computation and Data Analysis
What does Internal Rate of Return (IRR) indicate?
The discount rate that makes the net present value of all cash flows from a particular project equal to zero.
p.1
Price, Value, and Cost in Real Estate
What is Consumer Surplus?
The difference between what consumers are willing to pay for a good and what they actually pay.
p.7
Factors Influencing Housing Demand
What generally influences both individual and aggregate housing demand?
Price, availability of substitutes, and price & availability of complementary goods.
p.15
Methods of Property Valuation
Why is property valuation important for loans or mortgages?
It serves as security when loans are taken against the property.
p.10
Supply and Demand Dynamics
What happens to the equilibrium quantity when the supply curve shifts to the right?
The equilibrium quantity increases to Q1.
p.10
Supply and Demand Dynamics
What is the effect on equilibrium quantity when the demand curve shifts to D1?
The equilibrium quantity also increases to Q2.
p.1
Basics of Computation and Data Analysis
What are Fixed Costs?
Costs that do not change with the level of output.
p.8
Factors Influencing Housing Demand
What factors can lead to changes in housing demand?
Location/job changes, changes in family size, and changes in income.
p.13
Housing Supply and Construction Responses
What factors influence the supply of land?
Price and demand for housing.
p.1
Basics of Computation and Data Analysis
What does the Discounting Rate represent?
The interest rate used to determine the present value of future cash flows.
p.11
Supply and Demand Dynamics
What is the total demand for Decent Housing based on the number of households?
The total demand will be Qn, assuming that is the number of households in the area.
p.1
Basics of Computation and Data Analysis
What is Utility in economics?
A measure of satisfaction or pleasure derived from consuming goods and services.
p.10
Supply and Demand Dynamics
What happens to the equilibrium price when the supply curve shifts from S0 to S1?
The equilibrium price falls to P1.
p.15
Methods of Property Valuation
Name one method of property valuation.
Rental Method of Valuation.
p.15
Methods of Property Valuation
What is the focus of the Development method of valuation?
It evaluates the potential value of property development.
p.1
Basics of Computation and Data Analysis
What is Marginal Cost?
The cost of producing one additional unit of a good.
