A market in equilibrium is characterized by:
Correct Answer
D) Supply and demand roughly balanced at prevailing prices
Why this is correct: Market equilibrium is a theoretical state where the quantity of space supplied equals the quantity demanded at the prevailing market price (or rent). It is characterized by balance, not stasis, and includes a normal level of frictional vacancy. Why the other choices are wrong: 'No new construction of any kind' is incorrect; equilibrium can include construction that matches demand growth (absorption). 'Zero vacancy sustained across all of the property types' is false; equilibrium includes normal, healthy vacancy. 'Prices rising at a steady annual rate' describes a market trend, not an equilibrium condition. Exam tip: Equilibrium is a balancing point markets move through, not a permanent state. Look for 'balance' as the key descriptor.
Why This Is the Correct Answer
Why this is correct: Market equilibrium is a theoretical state where the quantity of space supplied equals the quantity demanded at the prevailing market price (or rent). It is characterized by balance, not stasis, and includes a normal level of frictional vacancy. Why the other choices are wrong: 'No new construction of any kind' is incorrect; equilibrium can include construction that matches demand growth (absorption). 'Zero vacancy sustained across all of the property types' is false; equilibrium includes normal, healthy vacancy. 'Prices rising at a steady annual rate' describes a market trend, not an equilibrium condition. Exam tip: Equilibrium is a balancing point markets move through, not a permanent state. Look for 'balance' as the key descriptor.
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In the neighborhood life cycle, what characterizes the decline stage?
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The principle of consistent use prohibits:
Frictional vacancy in a rental market refers to:
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