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      Question

      Hedonic pricing is a method used for environmental

      valuation that:
      A Focuses on valuing the environment based on its ecological carrying capacity. Correct Answer Incorrect Answer
      B Estimates the value of the environment by analyzing market prices of goods and services. Correct Answer Incorrect Answer
      C Assesses the value of the environment by estimating the cost of ecosystem services. Correct Answer Incorrect Answer
      D Determines the value of the environment by asking individuals about their preferences. Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Hedonic pricing is a method used for environmental valuation that estimates the value of the environment by analyzing market prices of goods and services. For example, a home close to parks or schools may sell for a premium. Meanwhile, a home right on a major highway may sell for less. Hedonic pricing uses regression to see which factors matter the most and each’s relative importance.

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