New Jersey Real Estate Practice Exam Free Practice Question
A number of manufacturing plants in Hometown City recently closed. Based on the principle of supply and demand, what will happen to the market value and the market price for properties in the area?
Correct Answer: D
Rationale: The closure of manufacturing plants typically leads to reduced demand for local properties, as fewer jobs may drive residents away. This decreased demand results in both a decline in market value and market price.
Option A suggests that market price remains stable, which is unlikely when demand decreases significantly. Option B posits that market value remains stable while price declines, but both are affected by the same supply and demand forces. Option C incorrectly states that market value increases; in a scenario of reduced economic activity, demand for properties diminishes, leading to lower values and prices. Thus, both market value and market price are expected to decline.
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