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Which of the following statements best describes the concept of market value?
Which of the following statements best describes the concept of market value? a) Market value is the value of a property based on its potential income and future cash flows.
b) Market value is the value of a property based on the price it would fetch in an open market under all conditions for a fair sale.
c) Market value is the value of a property based on the cost of construction and depreciation.
d) Market value is the value of a property based solely on the subjective opinions of buyers and sellers.
Final answer:Market value is the price that a property would fetch in an open market under all conditions for a fair sale, as determined by the willingness of buyers to pay based on comparative recent sales of similar properties. Therefore, the correct option is B.Explanation:The concept of market value is best described by the statement: Market value is the value of a property based on the price it would fetch in an open market under all conditions for a fair sale. This means that the market value of a property is determined by what buyers are willing to pay for it, not solely by its potential income, cost of construction, or subjective opinions. Assessors often use statistical models to estimate the market value by comparing the property to similar properties that have recently sold, thus inferring the market price.Market prices reflect the personal (subjective) values of buyers and sellers as they trade goods and services in a free market economy. The amount a buyer is willing to pay for an item and the price at which a seller is willing to sell it is agreed upon after negotiation, if both parties believe the trade will improve their respective situations. This negotiated price becomes the market price of the property. Therefore, the correct option is B....