Question

Which of the following characteristics of a house or land is/are considered in hedonic price function?

• A. Quality of the view from the house
• B. Low crime rate in the surrounding area
• C. Number of bedrooms in the house
• D. Household size

Hint:

Hedonic pricing models often consider characteristics that can affect the perceived value of a property, such as location, size, and neighborhood safety.

Answer 1

The Correct Option is A, B, C

The hedonic price function determines property value by its attributes. Key attributes considered include:

(A) View Quality: Enhanced views increase property price. Therefore, (A) is a relevant factor.

(B) Neighborhood Crime Rate: A low crime rate contributes to higher property prices. Hence, (B) is a relevant factor.

(C) Number of Bedrooms: This is a direct determinant of a house's value. Therefore, (C) is a relevant factor.

(D) Household Size: This relates to housing demand rather than being a direct input to the hedonic price function. Hence, (D) is not directly considered.

The relevant factors are (A), (B), and (C).