In the estimation of demand,the "identification problem" refers to
A)the problem of selecting the proper level of significance.
B)the problem of deciding whether to use time series or cross-sectional data.
C)the problem of separating out the effects of price on the quantity demanded when supply cannot be held constant.
D)the problem of having insufficient variation in prices.

Question

Quizplus · Accepted Answer

The identification problem refers to the challenge of determining the impact of price on demand when it is difficult or impossible to hold supply constant. This is often the case in real-world markets, where changes in price may have multiple causes and be influenced by factors outside of the researcher's control. As a result, it can be difficult to determine the true relationship between price and demand, which can complicate the process of estimating demand curves and making accurate predictions about consumer behavior.

In the Estimation of Demand,the "Identification Problem" Refers to