Final answer:
The correct answer to the question of what construction cost estimates must include when an appraiser considers the cost of building an improvement is C) Both labor and material costs, as these are essential components of the factors of production.
Step-by-step explanation:
When an appraiser considers the cost of building an improvement, it is essential to take into account all aspects that contribute to the overall expenses. This includes not only the labor and material costs but also additional costs such as administrative fees. The correct answer to this question is C) Both labor and material costs. Construction cost estimates must provide a comprehensive view considering several factors.
According to the concept of factors of production, which include land, labor, and capital, it's crucial to evaluate these costs thoroughly as they are vital for the profitability and decision-making in businesses. Labor costs will cover the wages and benefits for workers involved in the construction process, while material costs encompass all the raw materials and equipment needed for the project. It's common practice to also consider other costs, such as administrative expenses that might be incurred during the construction process, although the specific question does not include these in its options.