What does the Price-Related Differential (PRD) measure?

The Price-Related Differential (PRD) is a crucial metric used in the context of property assessments to evaluate assessment bias. It specifically measures the relationship between the assessed values of properties and their market values. When calculating the PRD, a value greater than one indicates that lower-valued properties are being disproportionately undervalued relative to higher-valued properties, which suggests the presence of assessment bias. A PRD equal to one indicates that properties of all value ranges are equally assessed, implying no bias.

Understanding assessment bias is vital for ensuring that the property assessment process is fair and equitable, particularly in maintaining the integrity of property tax systems. This is why the correct answer focuses on the PRD's role in identifying potential discrepancies in property valuations, which can help assessors make necessary adjustments to improve the accuracy and fairness of property assessments.