Question 1
You should upload a single word/pdf document that includes the standard assignment cover form and the answers to the 2 questions.
You should also upload a single excel file that contains whatever workings that you did to complete both questions reported in the word document. The word document should be standalone and provide the primary basis for assessment: submitting the excel file is a requirement but I will only look at the excel sheet if I need to check how you have undertaken the analysis (usually to try and spot where you have made an error if the results are not correct). There are two Turnitin upload points, one for the results document and one for the excel file. Make sure to use the right one for each.
In the table below is a data set reporting the visitation rates (per capita) for visitors to a national park. Also reported is the (round trip) distance from the zone to the park, and the population level in each zone.
The cost of traveling to the park is 30c per km, and for people traveling from zones 5-10 there is a toll both that charges $2.50 for each trip through it.
Your task is to use this data to estimate the total consumer surplus associated with visitation to this park, per year.
You should write up a short report (no more than 2 pages in total) outlining the steps that you took to complete this task. The report should include:
- A brief introduction explaining the nature of the problem that you are tackling.
- Table 1, augmented by a column that reports the cost per trip for each zone.
- A graph which shows a scatter of cost per trip against trips per capita
- The results of the regression analysis that you used to estimate the per capita trip function
- A graph of the aggregate trip demand function, showing how total trips would vary at different hypothetical park entry prices. That function should include a range of entry prices that go from zero (the current price) to the limiting price which causes the total number of trips to fall to zero.
- An estimate of the total consumer surplus enjoyed by those who currently visit the park.
In your report you should include a brief summary (a sentence or two) of each of these elements, sufficient that an independent reader would understand what you have done. You will have completed an excel file to undertake the analysis. You should upload the excel file as well as your word/pdf document. The results in the excel file should match those in the word document. The excel file will just be used for checking if you have made any mistakes, and the nature of the mistakes. The Word/pdf document should be selfcontained and explain everything that you have done.
Question 2.
A hedonic price study has been conducted with the objective of quantifying the impacts of environmental values through their impact on house prices.
An OLS regression has been undertaken, and Table 3 below reports the estimates. Note that the dependent variable is defined as ln(house price), and the distance to CBD includes a quadratic term, and the air quality index has been defined with a log transform. The other statistical measures have not been reported, but all estimated coefficients are significant.
- The predicted house price (in $) for a house that has all attributes set at their median levels
- Calculate the implicit price of a 1km increase in distance to CBD (using the median house price), at a distance of 10km, 20km and 30km.
- Generate a graph of the relationship between house price (in $) and CBD, for a house that has all other characteristics set at their median levels. For the graph, vary the distance from 0 to 50.
- How would you interpret these estimates (in b) and the graph (in c) from an economic perspective?
- Calculate the implicit price of an additional bedroom, and an additional 1m2 of property size and an additional 1 percentage point of Green Open Space (using the median house price).
- Calculate the implicit price of a 1 unit increase in the air quality index (using the median house price) at air quality index values of 50, 100, and 300.
- Generate a graph of the relationship between house price and the air quality index, for a house that has all other characteristics set at their median levels. For the graph, vary the level of air quality from 1 to 301, in steps of 10.
- How would you interpret these estimates (in f) and the graph (in g) from an economic perspective?
You should include these results in your word document, clearly indicating the part number, and providing sufficient discussion to be able to interpret the result.
You will have completed an excel file to undertake the analysis. You should include these workings in a separate excel sheet as part of the same excel file used to answer Question 1. Upload the excel file as well as your word/pdf document. The results in the excel file should match those in the word document. The excel file will just be used for checking if you have made any mistakes, and the nature of the mistakes. The Word/pdf document should be self-contained and explain everything that you have done. In summary:
You should upload a single word/pdf document that includes the standard assignment cover form and the answers to the 2 questions. You should also upload a single excel file that contains whatever workings that you did to complete both questions reported in the word document. The word document should be standalone and provide the primary basis for assessment: submitting the excel file is a requirement but I will only look at the excel sheet if I need to check how you have undertaken the analysis (usually to try and spot where you have made an error if the results are not correct). There are two Turnitin upload points, one for the results document and one for the excel file. Make sure to use the right one for each.
