Real Estate Principles A Value Approach 4th Edition By Ling and Archer – Test Bank

Complete Test Bank With Answers

 

 

Sample Questions Posted Below

 

5

1. 2. 3. 4. 5. 6. Student:

___________________________________________________________________________

A city’s potential for growth or its susceptibility to decline is determined by a set of economic activities

that the city provides for the world beyond its boundaries. Economists refer to this set of activities as a

city’s:

A. linkages

B. economic base

C. local economic activities

D. economies of scale

The demand for access between land uses is considered the “gravity” that holds a city together. These

relationships between land uses are commonly referred to as:

A. linkages

B. economic bases

C. local economic activities

D. economies of scale

A city’s economic base can be viewed in terms of a multiplier process, in which the money that is brought

in through export activities is then respent within the city. Which of the following economic activities is

the least likely to be considered a high-impact or high-multiplier economic base activity?

A. Tourism

B. Retirement

C. Computer assembly

D. Specialized medical services

The magnitude of an economic base multiplier depends upon the amount of money that “leaks” out

through expenditures outside of the city limits. The economic multiplier tends to be higher with each of

the following EXCEPT:

A. A higher percentage of local household income is respent within the city.

B. The larger the city is.

C. The less isolated the city is from other cities.

D. The more tourism a city brings in.

In contrast to base activities, local economic activities (or secondary activities) serve the local business

and households that are recirculating the income derived through the city’s economic base. In other

words, we can distinguish local economic activities from export activities by thinking about whether or

not the activity brings money into the city from outside sources. Which of the following activities is NOT

an example of land use for local economic activity?

A. Retail centers

B. Restaurants

C. Automotive services

D. Manufacturing Center

Because a city’s output capacities change slowly over time, it is important to understand the supply side

(long-run) factors affecting urban growth. Which of the following would NOT be considered a supply-

side factor that impacts a city’s economic growth?

A. Nature of the available labor force

B. Quality of life within a community

C. Cooperation of local leadership and government

D. City’s export activity7. 8. 9. 10. 11. 12. 13. Cities such as New York are able to host a variety of complex industries because of the development

of specialized resources that support their growth. When specialized resources emerge in response to

demand from multiple industries, this is referred to as:

A. industry economies of scale

B. agglomeration economies

C. locational monopoly

D. economic inefficiencies

The growth of the motion picture industry in Los Angeles, the petrochemical industry in Houston, the

software industry in “Silicon Valley,

” are all examples of how the growth of an industry within a city can

create cost advantages for future growth. Economists refer to this phenomenon as:

A. industry economies of scale

B. agglomeration economies

C. locational monopoly

D. economic inefficiencies

According to the bid-rent model, which of the following changes in the model’s underlying assumptions

would most likely result in a decrease in rents for properties closest to the central business district

(CBD)?

A. An increase in an individual’s hourly wage

B. An increase in the average traveling speed of the individual’s commute

C. An increase in the number of households attempting to live in the area

D. An increase in the number of days an individual must commute to work

According to the bid-rent model, which of the following individuals would be the one most likely to live

closest to the central business district (CBD)? (Hint: Assume that work locations are located adjacent to

each other at the center of the CBD)

A. A barista at the local coffee shop who uses a car to commute.

B. A doctor at the city hospital who uses a car to commute.

C. A barista at the local coffee shop who must walk to work.

D. A doctor at the city hospital who must walk to work.

Within the framework of the bid-rent model, as rents increase with proximity to the central business

district (CBD), the tendency is for development to:

A. spread to the outskirts of the city.

B. build upward on lots within the CBD to allow multiple tenants.

C. cease completely.

D. focus on low-income housing projects.

An early model of land use is the concentric ring model of urban form developed by E.W. Burgess. Of

the following land uses, which would be closest to the downtown area of the central business district

(CBD) according to Burgess’ model?

A. Blue-collar residential land use

B

A zone of transition containing warehousing and other industrial land uses exists between the

.

downtown area and the residential area.

C. White-collar clerical residential land use

D. Executive residential land use

Which of the following models of urban form is characterized by radial corridors or wedges representing

the pattern of residential land use in relation to the location of the central business district (CBD)?

A. Bid-rent model

B. Concentric circle model

C. Sector model

D. Multi-nuclei model14. 15. 16. 17. 18. 19. The location of competitors within a particular land use area may be influenced by whether the types of

services and products are convenience activities or comparison activities. Which of the following is an

example of a comparison activity?

A. Supermarket

B. Coffee boutique

C. Fast-food restaurant

D. Apparel store

Providers of convenience activities find it profit-maximizing to disperse over the region of potential

customers to the point where each establishment is equidistant from another and is separated by the

minimum distance that allows sufficient customers to support each establishment. The resulting pattern of

establishment locations is referred to as:

A. central place pattern

B. clustering

C. concentric circle

D. multi-nuclei

Most research oriented universities have many different colleges, each with separate administrations,

students, curricula, and facilities. However, the university continues to exist as a total unit because of:

A. industry economies of scale

B. locational monopoly

C. economic inefficiencies

D. negative externalities

A fishing company was formed in Juneau, Alaska. Over the next decade, a canning plant, a processing

plant, and a boat repair facility also opened in Juneau. This is an example of:

A. industry economies of scale

B. agglomeration economies

C. location quotient

D. linkages

Six suburban office buildings have been constructed along six consecutive blocks in Roseland, New

Jersey. This is an example of:

A. central place pattern

B. clustering

C. concentric circle

D. multi-nuclei

Understanding the revenue generating ability of the core export activities of a local area has important

implications on the market value of real estate. When the income that these activities generate is re-spent

within the community on other local goods and services, the community is benefiting through a:

A. dividend process

B. multiplier process

C. forced saving process

D. diversification process20. 21. 22. 23. 24. 25. An important effect of agglomeration economies on real estate is its impact upon market risk. Based on

your understanding of this relation, which of the following statements is TRUE?

A

Properties located in a city with more advanced development of agglomeration economies will carry

.

more risk and therefore suffer a larger price decline during an economic downturn than comparable

properties in a city with less agglomeration.

B

Properties located in a city with more advanced development of agglomeration economies will carry less

.

risk and therefore suffer a larger price decline during an economic downturn than comparable properties

in a city with less agglomeration.

C

Properties located in a city with more advanced development of agglomeration economies will carry

.

more risk and therefore suffer a smaller price decline during an economic downturn than comparable

properties in a city with less agglomeration.

D

Properties located in a city with more advanced development of agglomeration economies will carry

.

less risk and therefore suffer a smaller price decline during an economic downturn.

Based on your understanding of the effect of agglomeration economies in real estate, you would expect

institutional investors to most favor real estate investments in which of the following areas?

A. small urban markets

B. large urban markets

C. small rural markets

D. large rural markets

Using the following information, determine the location quotient for this industry. Percentage of

employment in financial services industry within the local community: 15%, Percentage of employment

in financial services industry for the entire U.S.: 4.4%.

A. 0.3

B. 3.4

C. 10.6

D. 19.4

An individual works downtown and pays $600 per month in rent for an apartment located 10 miles from

her office. She has calculated that she spends 30 minutes per day driving each way to the office and it

costs her $4 per day in gas and lost productivity. Using the framework of the bid-rent model, how much

would she be willing to pay for an apartment downtown, assuming a 20 workday month?

A. $80

B. $440

C. $520

D. $680

Using the following information, determine the location quotient for Motor City. Employment in

Motor Vehicle Manufacturing within Motor City: 12,643; Total Employment in Motor City: 560,379;

Employment in Motor Vehicle Manufacturing (nationally): 152,750; Total Employment (nationally):

106,201,232

A. 0.1

B. 12.1

C. 15.7

D. 44.3

A new faculty member at the local university pays $1500 per month to rent an apartment in the

downtown area. She teaches on campus 3 days a week and works from home the remaining 2 days. On

the days in which she must commute, given the heavy traffic congestion, it takes her 2 hours to commute

from downtown to campus. According to the assumptions of the bid-rent model, what should this

professor be willing to pay in rent per month to live near campus if her hourly wage rate is $25? (In your

calculations, assume there are 4 weeks in a given month)

A. $1200

B. $1500

C. $2100

D. $270026. Based on the following information, determine the location quotient for Amusement City and whether

this city has a competitive advantage in the amusement industry. Employment in Amusements and

Recreation in Amusement City: 54,446; Total Employment in Amusement City: 578,477; Employment in

Amusements and Recreation (nationally): 1,381,377; Total Employment (nationally): 106,201,232.

A. 0.14; No, the city does not have a competitive advantage in this industry.

B. 7.24; No, the city does not have a competitive advantage in the industry.

C. 0.14; Yes, the city has a competitive advantage in this industry.

D. 7.24; Yes, the city has a competitive advantage in this industry.

1. 2. 3. 4. 5. 5 Key

A city’s potential for growth or its susceptibility to decline is determined by a set of economic

activities that the city provides for the world beyond its boundaries. Economists refer to this set of

activities as a city’s:

A. linkages

B. economic base

C. local economic activities

D. economies of scale

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

Difficulty: Basic

city.

Ling – Chapter 05 #1

The demand for access between land uses is considered the “gravity” that holds a city together. These

relationships between land uses are commonly referred to as:

A. linkages

B. economic bases

C. local economic activities

D. economies of scale

Difficulty: Basic

Learning Objective: 05-01 Explain the role of transportation modes and natural resources in the location and evolution of cities.

Ling – Chapter 05 #2

A city’s economic base can be viewed in terms of a multiplier process, in which the money that is

brought in through export activities is then respent within the city. Which of the following economic

activities is the least likely to be considered a high-impact or high-multiplier economic base activity?

A. Tourism

B. Retirement

C. Computer assembly

D. Specialized medical services

Difficulty: Intermediate

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

city.

Ling – Chapter 05 #3

The magnitude of an economic base multiplier depends upon the amount of money that “leaks” out

through expenditures outside of the city limits. The economic multiplier tends to be higher with each

of the following EXCEPT:

A. A higher percentage of local household income is respent within the city.

B. The larger the city is.

C. The less isolated the city is from other cities.

D. The more tourism a city brings in.

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

Difficulty: Advanced

city.

Ling – Chapter 05 #4

In contrast to base activities, local economic activities (or secondary activities) serve the local

business and households that are recirculating the income derived through the city’s economic base.

In other words, we can distinguish local economic activities from export activities by thinking about

whether or not the activity brings money into the city from outside sources. Which of the following

activities is NOT an example of land use for local economic activity?

A. Retail centers

B. Restaurants

C. Automotive services

D. Manufacturing Center

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

Difficulty: Intermediate

city.

Ling – Chapter 05 #56. Because a city’s output capacities change slowly over time, it is important to understand the supply

side (long-run) factors affecting urban growth. Which of the following would NOT be considered a

supply-side factor that impacts a city’s economic growth?

A. Nature of the available labor force

B. Quality of life within a community

C. Cooperation of local leadership and government

D. City’s export activity

7. Difficulty: Intermediate

Learning Objective: 05-03 Identify supply factors influencing the growth of a city.

Ling – Chapter 05 #6

Cities such as New York are able to host a variety of complex industries because of the development

of specialized resources that support their growth. When specialized resources emerge in response to

demand from multiple industries, this is referred to as:

A. industry economies of scale

B. agglomeration economies

C. locational monopoly

D. economic inefficiencies

8. Difficulty: Basic

Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each.

Ling – Chapter 05 #7

The growth of the motion picture industry in Los Angeles, the petrochemical industry in Houston, the

software industry in “Silicon Valley,

” are all examples of how the growth of an industry within a city

can create cost advantages for future growth. Economists refer to this phenomenon as:

A. industry economies of scale

B. agglomeration economies

C. locational monopoly

D. economic inefficiencies

Difficulty: Basic

Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each.

Ling – Chapter 05 #8

9. According to the bid-rent model, which of the following changes in the model’s underlying

assumptions would most likely result in a decrease in rents for properties closest to the central

business district (CBD)?

A. An increase in an individual’s hourly wage

B. An increase in the average traveling speed of the individual’s commute

C. An increase in the number of households attempting to live in the area

D. An increase in the number of days an individual must commute to work

Difficulty: Advanced

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Ling – Chapter 05 #9

10. According to the bid-rent model, which of the following individuals would be the one most likely

to live closest to the central business district (CBD)? (Hint: Assume that work locations are located

adjacent to each other at the center of the CBD)

A. A barista at the local coffee shop who uses a car to commute.

B. A doctor at the city hospital who uses a car to commute.

C. A barista at the local coffee shop who must walk to work.

D. A doctor at the city hospital who must walk to work.

Difficulty: Advanced

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Ling – Chapter 05 #10

11. Within the framework of the bid-rent model, as rents increase with proximity to the central business

district (CBD), the tendency is for development to:

A. spread to the outskirts of the city.

B. build upward on lots within the CBD to allow multiple tenants.

C. cease completely.

D. focus on low-income housing projects.

Difficulty: Intermediate

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Ling – Chapter 05 #1112. An early model of land use is the concentric ring model of urban form developed by E.W. Burgess. Of

the following land uses, which would be closest to the downtown area of the central business district

(CBD) according to Burgess’ model?

A. Blue-collar residential land use

B. A zone of transition containing warehousing and other industrial land uses exists between the

downtown area and the residential area.

C. White-collar clerical residential land use

D. Executive residential land use

Difficulty: Basic

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Ling – Chapter 05 #12

13. Which of the following models of urban form is characterized by radial corridors or wedges

representing the pattern of residential land use in relation to the location of the central business district

(CBD)?

A. Bid-rent model

B. Concentric circle model

C. Sector model

D. Multi-nuclei model

Difficulty: Basic

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Ling – Chapter 05 #13

14. The location of competitors within a particular land use area may be influenced by whether the types

of services and products are convenience activities or comparison activities. Which of the following is

an example of a comparison activity?

A. Supermarket

B. Coffee boutique

C. Fast-food restaurant

D. Apparel store

15. Difficulty: Intermediate

Learning Objective: 05-06 Distinguish between “convenience goods” and “comparison goods” in their urban location patterns.

Ling – Chapter 05 #14

Providers of convenience activities find it profit-maximizing to disperse over the region of potential

customers to the point where each establishment is equidistant from another and is separated by the

minimum distance that allows sufficient customers to support each establishment. The resulting

pattern of establishment locations is referred to as:

A. central place pattern

B. clustering

C. concentric circle

D. multi-nuclei

16. Difficulty: Intermediate

Learning Objective: 05-06 Distinguish between “convenience goods” and “comparison goods” in their urban location patterns.

Ling – Chapter 05 #15

Most research oriented universities have many different colleges, each with separate administrations,

students, curricula, and facilities. However, the university continues to exist as a total unit because

of:

A. industry economies of scale

B. locational monopoly

C. economic inefficiencies

D. negative externalities

Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each.

Difficulty: Intermediate

Ling – Chapter 05 #1617. A fishing company was formed in Juneau, Alaska. Over the next decade, a canning plant, a processing

plant, and a boat repair facility also opened in Juneau. This is an example of:

A. industry economies of scale

B. agglomeration economies

C. location quotient

D. linkages

18. Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each.

Difficulty: Advanced

Ling – Chapter 05 #17

Six suburban office buildings have been constructed along six consecutive blocks in Roseland, New

Jersey. This is an example of:

A. central place pattern

B. clustering

C. concentric circle

D. multi-nuclei

19. 20. 21. Difficulty: Advanced

Learning Objective: 05-06 Distinguish between “convenience goods” and “comparison goods” in their urban location patterns.

Ling – Chapter 05 #18

Understanding the revenue generating ability of the core export activities of a local area has important

implications on the market value of real estate. When the income that these activities generate is re-

spent within the community on other local goods and services, the community is benefiting through

a:

A. dividend process

B. multiplier process

C. forced saving process

D. diversification process

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

Difficulty: Basic

city.

Ling – Chapter 05 #19

An important effect of agglomeration economies on real estate is its impact upon market risk. Based

on your understanding of this relation, which of the following statements is TRUE?

A

Properties located in a city with more advanced development of agglomeration economies will carry

.

more risk and therefore suffer a larger price decline during an economic downturn than comparable

properties in a city with less agglomeration.

B

Properties located in a city with more advanced development of agglomeration economies will carry

.

less risk and therefore suffer a larger price decline during an economic downturn than comparable

properties in a city with less agglomeration.

C

Properties located in a city with more advanced development of agglomeration economies will carry

.

more risk and therefore suffer a smaller price decline during an economic downturn than comparable

properties in a city with less agglomeration.

D

Properties located in a city with more advanced development of agglomeration economies will carry

.

less risk and therefore suffer a smaller price decline during an economic downturn.

Difficulty: Advanced

Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each.

Ling – Chapter 05 #20

Based on your understanding of the effect of agglomeration economies in real estate, you would

expect institutional investors to most favor real estate investments in which of the following areas?

A. small urban markets

B. large urban markets

C. small rural markets

D. large rural markets

Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each.

Difficulty: Advanced

Ling – Chapter 05 #2122. Using the following information, determine the location quotient for this industry. Percentage

of employment in financial services industry within the local community: 15%, Percentage of

employment in financial services industry for the entire U.S.: 4.4%.

A. 0.3

B. 3.4

C. 10.6

D. 19.4

23. Difficulty: Basic

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

city.

Ling – Chapter 05 #22

An individual works downtown and pays $600 per month in rent for an apartment located 10 miles

from her office. She has calculated that she spends 30 minutes per day driving each way to the office

and it costs her $4 per day in gas and lost productivity. Using the framework of the bid-rent model,

how much would she be willing to pay for an apartment downtown, assuming a 20 workday month?

A. $80

B. $440

C. $520

D. $680

Difficulty: Advanced

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Ling – Chapter 05 #23

24. Using the following information, determine the location quotient for Motor City. Employment in

Motor Vehicle Manufacturing within Motor City: 12,643; Total Employment in Motor City: 560,379;

Employment in Motor Vehicle Manufacturing (nationally): 152,750; Total Employment (nationally):

106,201,232

A. 0.1

B. 12.1

C. 15.7

D. 44.3

25. Difficulty: Intermediate

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

city.

Ling – Chapter 05 #24

A new faculty member at the local university pays $1500 per month to rent an apartment in the

downtown area. She teaches on campus 3 days a week and works from home the remaining 2 days.

On the days in which she must commute, given the heavy traffic congestion, it takes her 2 hours

to commute from downtown to campus. According to the assumptions of the bid-rent model, what

should this professor be willing to pay in rent per month to live near campus if her hourly wage rate is

$25? (In your calculations, assume there are 4 weeks in a given month)

A. $1200

B. $1500

C. $2100

D. $2700

Learning Objective: 05-04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities within a city.

Difficulty: Advanced

Ling – Chapter 05 #2526. Based on the following information, determine the location quotient for Amusement City and whether

this city has a competitive advantage in the amusement industry. Employment in Amusements

and Recreation in Amusement City: 54,446; Total Employment in Amusement City: 578,477;

Employment in Amusements and Recreation (nationally): 1,381,377; Total Employment (nationally):

106,201,232.

A. 0.14; No, the city does not have a competitive advantage in this industry.

B. 7.24; No, the city does not have a competitive advantage in the industry.

C. 0.14; Yes, the city has a competitive advantage in this industry.

D. 7.24; Yes, the city has a competitive advantage in this industry.

Difficulty: Advanced

Learning Objective: 05-02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or decline of a

city.

Ling – Chapter 05 #26

5 Summary

Category # of Questions

Difficulty: Advanced 10

Difficulty: Basic 8

Difficulty: Intermediate 8

Learning Objective: 05-01 Explain the role of transportation modes and natural resources in the location and evolution of cities. 1

Learning Objective: 05-

8

02 Define economic base activities; distinguish them from secondary activities; and explain the role of both in the growth or declin

e of a city.

Learning Objective: 05-03 Identify supply factors influencing the growth of a city. 1

Learning Objective: 05-

7

04 Demonstrate how demand for access influences the value of urban land and determines the patterns of location of activities with

in a city.

Learning Objective: 05-06 Distinguish between “convenience goods” and “comparison goods” in their urban location patterns. 3

Learning Objective: 05-07 Define industry economies of scale and agglomeration economies of scale; and offer examples of each. 6

Ling – Chapter 05 26