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17 June, 09:52

Certain economic principles are of considerable importance in the valuation of real estate. The principle that "no buyer will pay more for a product than the price he can pay for a reasonable duplicate" is known as the principle of:

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  1. 17 June, 13:32
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    Substitution

    Explanation:

    Principle of subsitution states that no consumer should buy a product for a high price of he can get an alternative (duplicate) that is of a cheaper price.

    Substitutes are alternatives that provide similar satisfaction to the customer.

    When the price of one product goes up the customer has a choice of going for an alternative.

    For example honey and sugar are substitutes. When the price of one goes down people will go for the cheaper alternative. This acts as a price control mechanism.
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