Exam 4 CBA - 1Methods of Cost-Benefit Analysis Professor...

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1Methods of Cost-Benefit Analysis, Professor Russell Answers to QUIZ, November 17, 2011 1. The equation below shows two coefficients from Uyeno et al., “Land Use and the Impact of Airport Noise,” Table 5. PRICE is the price of a vacant lot. Ln PRICE = intercept – 0.0166 NEF + 0.1979 BIGLOT …. A. (20 points) Interpret the coefficient on NEF, a measure of noise in decibels. The coefficient on NEF shows that the price of a vacant lot decreases 1.66 % for each decibel increase in noise level. B. (20 points) Explain what the hedonic price for noise tells you and how to calculate it. The hedonic price shows the dollar reduction in the price of a vacant lot because of a one-decibel increase in noise level. It is calculated by multiplying the coefficient on noise, -0.0166, by the price of a vacant lot. (Mean or median price is a conventional choice.) C. (10 points) Interpret the coefficient on BIGLOT, which equals 1 for a lot more than 10,000 square feet in size, 0 for a smaller lot.
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