Why does land suitable for a specific use come into especially short supply in a growing area?
Correct Answer
A) Land is limited, and demand for that use can exceed supply
Land is a limited commodity, and land suitable for a specific use will be in especially short supply if the perceived need for it is great; expanding purchasing power adds pressure on that fixed supply.
Why This Is the Correct Answer
Option A is correct because land is limited, and land suitable for a specific use will be in especially short supply if the perceived need for it is great. In a growing area, demand for that use can exceed the available suitable land.
Why the Other Options Are Wrong
Option B: Land supply grows in proportion to demand over time
Option B, that land supply grows in proportion to demand over time, is wrong because the supply of land is essentially fixed. It does not expand to match demand.
Option C: Builders are required by law to hold land off the market
Option C, that builders are required by law to hold land off the market, is wrong because there is no general legal requirement for builders to withhold land. Scarcity comes from limited supply and strong demand.
Option D: Zoning prohibits new development in growing areas
Option D, that zoning prohibits new development in growing areas, is wrong because zoning regulates use and density but does not generally ban development where growth occurs. It does not explain the general scarcity described.
Fixed land, growing need
Demand can grow, but suitable land does not, so specific-use sites get scarce.
How to use: Use this when explaining why land for a particular use becomes scarce in growth areas.
Exam Tip
Reject options claiming land supply expands with demand; the limited supply of land is the core idea.
Common Mistakes to Avoid
- -Assuming land supply responds to demand like manufactured goods
- -Blaming scarcity on zoning alone
- -Ignoring demand pressure when analyzing land sales
Concept Deep Dive
Analysis
This question tests the scarcity of land suited to particular uses. Land is a limited commodity, and when demand for a specific use is strong, suitable sites become especially scarce. Growth and rising purchasing power add pressure to that fixed supply.
Background Knowledge
Scarcity is one of the factors of value. Because land cannot be produced, suitable sites for in-demand uses tend to become scarce as an area grows. Rising purchasing power increases competition for those sites and can push land values up.
Real-World Application
In a fast-growing suburb, few remaining parcels are flat, serviced and zoned for single-family homes. Several builders compete for them, and sale prices rise. The appraiser supports the site value with recent land sales showing that competition.
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