The most robust (but perhaps impractical) way to estimate the price elasticity of demand for your product would be:
A) to ask past customers their willingness to pay.
B) convert your products prices in real terms and estimate a demand curve.
C) randomize the price over a period of time and estimate the difference in sales resulting from those changes.
D) announce an upcoming discount, and track sales increases pre-post.

Question

Quizplus · Accepted Answer

Randomizing the price over a period of time and estimating the difference in sales resulting from those changes is the most robust way to estimate the price elasticity of demand because it allows for a direct observation of the change in demand resulting from a change in price. However, this method could be impractical as it requires a significant investment of time and resources. The other options may provide some insights into the price elasticity of demand, but they are less reliable and less accurate than the randomized pricing experiment.

The Most Robust (But Perhaps Impractical) Way to Estimate the Price