You are collecting information on prices and attributes of electrical vehicles such as the mile range from a single charge for a bunch of electric cars. Suppose your company has created an electric vehicle that will have a mile range twice as large as an existing electric vehicle on the market. Does the model you've estimated have an identification problem?
A) No, because this data gap does not exist in the population.
B) Yes, the extrapolation required exists in the population of current electric vehicles, not just your sample.
C) Yes, but you can still extrapolate the data gap.
D) No, because data gaps cannot cause identification problems.

Question

Quizplus · Accepted Answer

The model has an identification problem because the extrapolation required to estimate the price of an electric vehicle with a mile range twice as large as any existing electric vehicle is not just present in the sample, but in the population of current electric vehicles. This means there is uncertainty in the estimate because there is no direct observation of the attribute being estimated.

You Are Collecting Information on Prices and Attributes of Electrical