Florida Real Estate Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

According to a well-known economic principle, how is a property's value determined?

Conforming value

Similar cost principle

Regression

Substitution

Substitution is a well-known economic principle which states that the value of any property or good is determined by the cost of replacing it with a comparable substitute. This method is widely used in real estate and insurance industries to determine the value of a property or asset.

Option A, conforming value, is not a commonly known economic principle and is not a valid substitute for the concept of substitution.

Option B, similar cost principle, is also not a recognized economic principle.

Option C, regression, is a statistical method used to determine correlations between variables and would not apply to determining a property's value.

Overall, substitution is the most appropriate answer as it directly connects to the cost and replacement value of a property.

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