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Answer:
Explanation: The principle of diminishing returns in property appraisal states that the value of an improvement will not necessarily increase in proportion to its cost.
2. In this case, the pool cost $25,000 to install but only added $15,000 to the property's appraised value.
3. The discrepancy between the cost of the pool and the increase in property value indicates that the pool did not provide a full return on investment in terms of added value.
4. This principle highlights that there is a point where additional investment in an improvement may not yield a proportional increase in the property's overall value.
5. Therefore, the scenario of the pool adding $15,000 to the property's value despite costing $25,000 to install is a clear example of the principle of diminishing returns in property appraisal.
In conclusion, the principle of diminishing returns explains how the value added to a property by an improvement may not always align with the cost of that improvement, leading to a situation where the return on investment diminishes as additional resources are invested.
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