Which of the following is a limitation of demand estimation through price experimentation?
A. This approach is comparatively more expensive than the other approaches of demand estimation.
B. There is no uniform result as the demand will differ, depending on whether customers anticipate that a price change is permanent or temporary.
C. Direct market tests like price experimentation are controlled experiments and will not reflect the effects of other changes in the market.
D. Consumers have incentives to be less truthful in their reaction to price changes, which will provide flawed data.
Answer: B
You might also like to view...
Which of the following influences the slope of the LM curve?
A) The interest-sensitivity of money demand B) The interest-sensitivity of investment C) The interest-sensitivity of government spending D) The interest-sensitivity of saving
An import quota does which of the following? a. decreases the price of the imported goods to consumers b. increases the price of the domestic goods to consumers c. increases the domestic quantity demanded
d. both (a) and (c)
What does it mean when a good is rival in consumption?
a) One person's use of the good diminishes another person's ability to use it. b) People can be prevented from using the good. c) No more than one person can use the good at a time. d) Everyone will be excluded from obtaining the good.
During times of financial hardship, the number of people on public assistance ______, causing aggregate demand to ______.
a. decreases; decrease b. increases; increase c. decreases; increase d. increases; decrease