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 is used to estimate the value of a property based on its characteristics. The characteristics of a house or land considered in the hedonic price function include:

(A) Quality of the view from the house: The view quality influences the price. Therefore, (A) is correct.

(B) Low crime rate in the surrounding area: A safer environment typically increases the price. Hence, (B) is correct.

(C) Number of bedrooms in the house: The number of bedrooms is a direct determinant of the house's value. Therefore, (C) is correct.

(D) Household size: Household size is not directly considered in the hedonic price function as it pertains more to the demand side of housing. Hence, (D) is incorrect.

Thus, the correct answer is (A), (B), and (C).