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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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