Question

After freeway construction, the volume of business on a street decreased by 50%. This is considered a(n)

a. amenity
b. appurtenance
c. external obsolescence
d. functional obsolescence

Answer 1

The decline in business traffic due to freeway construction is an instance of external obsolescence, where an external factor diminishes a property's value or utility.

Step-by-step explanation:

The reduction in business volume by 50% after the freeway construction is an example of external obsolescence. External obsolescence occurs when factors outside the control of a property owner negatively affect its value. In this case, the freeway construction is the external factor that caused a decrease in the street's business volume, implying a drop in value or utility for the existing businesses.

This scenario is different from functional obsolescence, which would imply that the property itself has become less functional or desirable due to changes or inefficiencies within. External obsolescence is akin to the term 'spillover', where a market exchange affects third parties not involved in the transaction, similar to how nearby residents might experience noise from a concert arena even though they are not part of the ticket buying/selling process.