Hedonic pricing and contingent valuation are two ways of valuing environmental benefits. However, they both rely on finding the public's 'willingness to pay for those benefits. Which of the following objections applies to both of these approaches? It is difficult to know what people are willing to pay. Hedonic pricing ignores many factors other than some environmental issue that may cause variations in market prices. Willingness to pay may be highly unstable over time. What is valued today may be seen as less desirable tomorrow. Willingness to pay cannot be separated from ability to pay. Poor people may not be able to pay even for some of the most valuable environmental 'goods: It relies upon what people say they are willing to pay, which might not be truthful. Overstating the willingness to pay makes it more likely that the policymaker will adopt the improvement in question.

Hedonic pricing and contingent valuation are two ways of valuing environmental benefits. However, they both rely on finding the public's 'willingness to pay for those benefits. Which of the following objections applies to both of these approaches? It is difficult to know what people are willing to pay. Hedonic pricing ignores many factors other than some environmental issue that may cause variations in market prices. Willingness to pay may be highly unstable over time. What is valued today may be seen as less desirable tomorrow. Willingness to pay cannot be separated from ability to pay. Poor people may not be able to pay even for some of the most valuable environmental 'goods: It relies upon what people say they are willing to pay, which might not be truthful. Overstating the willingness to pay makes it more likely that the policymaker will adopt the improvement in question.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 2MC

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