Question

The __________ affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute.

A. Substitution principle
B. Law of demand
C. Diminishing returns
D. Elasticity concept

Answer 1

The Substitution principle states that the highest value of a property is determined by the cost of obtaining an equally desirable substitute.

Step-by-step explanation:

The correct answer to the question is A. Substitution principle. This principle affirms that the maximum value of a property is set by the cost of acquiring an equally desirable and valuable substitute. This is because if an alternative asset or property is available at a lower cost, the maximum price that people are willing to pay for the property in question will be capped by the price of the substitute.