PSI Virginia Real Estate Practice Exam

Which principle implies that the scarcity of a commodity influences its value?

1. Principle of Anticipation

2. Principle of Demand, Supply, and Desire

3. Principle of Substitution

4. Principle of Progression

The correct answer is: Principle of Demand, Supply, and Desire

The principle that suggests the scarcity of a commodity influences its value is the Principle of Demand, Supply, and Desire. This principle highlights the relationship between the availability of a product and its perceived value in the market. When a commodity is scarce, it typically means that demand exceeds supply, leading to an increase in its value. Buyers are often willing to pay more for something that is in limited supply because it is perceived as having greater worth or desirability. Conversely, when a commodity is abundant, its value tends to decrease, as more of it is available than people may want or need. This interplay of supply and demand is fundamental in real estate, where factors such as location, market conditions, and economic trends can affect how scarce a property is perceived to be, thereby influencing its market value. Understanding this principle helps in making informed decisions related to buying, selling, or investing in real estate.