Question

George wanted a home in the St. Paul area. He was willing to pay premium price for it even though there were other homes in other areas that were better values. When George was asked why he was willing to pay so much, he told the sales associate that he worked in that area and that he wanted his children to attend school in a specific school district. George's willingness to pay top dollar for a home in St. Paul is because of which characteristic of value?

Answer 1

George's willingness to pay more for a house in St. Paul is due to the 'location utility' characteristic of value, emphasizing the desirability of the property's location.

Step-by-step explanation:

George's willingness to pay a premium price for a home in St. Paul demonstrates the characteristic of value known as location utility. The location utility is the value and desirability a property offers based on its location and the benefits that come with it, such as proximity to work, preferred school districts, local amenities, and the overall quality of life in the area. This concept is particularly relevant in the context of residential real estate, where buyers like George assign a higher value to properties based on non-economic factors that fulfill their personal needs and expectations.