What does the difference in value of the houses represent

Reference no: EM131777738

Question: Hedonic Modeling

Assume we have two identical houses. Each house is a 3 bedroom, 3 bath, 2000 square feetwhite house on a 1 acre lot and both were built in 1996. The single difference is that house B islocated near a hazardous waste site and house A is not.

a) If both homes are listed for sale at a price of $200,000, carefully explain what willhappen to the prices of these houses before the market reaches equilibrium.

b) Which house is now more expensive? Why?

c) What does the difference in the value of the houses represent?

d) Explain the concept of compensating differentials in terms of the propertytransactions described above.

Reference no: EM131777738

Questions Cloud

Calculate the future value of the next best alternative : You are considering installing all new compact fluorescent light bulbs in your house. Your initial investment in the light bulbs will cost a total of $400.

What elements should a designer or manager include : What types of items should you incorporate into an organization's brochure?What elements should a designer or manager include when developing a brochure?

List five interventions to address the global social problem : Discuss the Human Trafficking: Policy Perspective and Interventions. List at least 5 interventions to address the global social problem.

Can you re-create hydrox through a name change : Can you modify the original formula to make something new and more competitive? Will a brand extension work here? Why or why not?

What does the difference in value of the houses represent : Assume we have two identical houses. Each house is a 3 bedroom, 3 bath, 2000 square feetwhite house on a 1 acre lot and both were built in 1996.

Explain the weakness in internal control : For each procedure, explain the weakness in internal control, and identify the control principle that is violated

Differences between major firms in the industry : For the healthcare Industry: Submit analysis of current forces affecting the auto industry and begin competitve structure and resources).

Explain the life cycle of a supply chain : Develop a creative, engaging, educational handout that students can use to prepare for the quiz. Diagram and explain the life cycle of a supply chain.

Describe the circumstance where you anticipate you will have : Part 1- In one short introductory paragraph, describe the circumstance where you anticipate you will have those intercultural interactions characterize.

User Account

All Pages