Question

When an appraiser relies on the principle of substitution, he assumes that one property may be substituted for another in terms of

1. Income
2. Use.
3. Structural design
4. Statement of fact.

Answer 1

The principle of substitution in appraisal assumes the interchangeability of properties based on comparable characteristics like income, use, and structural design, reflecting consumer behavior as explained by the substitution effect in economics. option 1,2,3 are answer

Step-by-step explanation:

When an appraiser relies on the principle of substitution, they assume that one property can be replaced with another if the two are similar in certain characteristics.

These characteristics may include similar levels of income generation, comparable use, akin structural design, or the same statement of fact. The assumption is grounded on the belief that a buyer will not pay more for a property than what they would for an alternative, similarly desirable substitute.

The concept of substitution is related to the substitution effect in economics, which refers to the consumer's tendency to replace more expensive goods with less expensive ones while maintaining the same level of utility. The substitution effect occurs alongside the income effect, which describes changes in consumption resulting from changes in purchasing power.option 1,2,3 are answer