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The principle of competition in terms of property management states rental rates are affected by _____

A) Market demand and supply.
B) Economic inflation rate.
C) Government regulations.
D) Property tax rates.

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Rental rates in property management are primarily affected by market demand and supply. Changes in tastes or incomes can shift the demand curve, leading to increased equilibrium prices and quantities for rental units.

The principle of competition in terms of property management indicates that rental rates are affected by market demand and supply. For instance, when a suburb becomes more popular due to changes in tastes or an expansion of local businesses leading to higher incomes, the demand for rental housing increases, shifting the demand curve to the right. This shift results in higher equilibrium prices and quantities, as seen in the transition from an equilibrium price of $500 and 15,000 units to a new equilibrium price of $600 and 17,000 units.

Therefore, a rise in incomes or a change in preferences directly affects the rental market, increasing competition and rental prices. Thus A) Market demand and supply is the correct factor that affects rental rates in the context of property management.

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