Price Check on Aisle 2 - Price Check on Aisle 2 BA206...

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Price Check on Aisle 2 BA206 Macroeconomics Robert McGill 18 Oct 2011 Price Check 1
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The hedonic pricing method states that the price of a marketed good is related to its characteristics, or the services it provides. For example, the price of a car reflects the characteristics of that car—transportation, comfort, style, luxury, fuel economy, etc. Therefore, we can value the individual characteristics of a car or other good by looking at how the price people are willing to pay for it changes when the characteristics change. To apply the hedonic pricing method, the following information must be collected: A measure of the environmental amenity of interest. A cross-section of the item’s values and characteristics for a well-defined market area that includes similar items with different levels of quality, or different features. The data is then analyzed using regression analysis, which relates the price of the item to its characteristics and the characteristics of interest.
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