The identification problem is dealt with in practice by including all of the determinants of demand in the estimated demand function.

Question

Quizplus · Accepted Answer

The identification problem arises when the explanatory variables in a regression model are correlated, making it difficult to determine the individual effect of each variable on the dependent variable. Including all of the determinants of demand in the estimated demand function helps to address this problem by ensuring that the explanatory variables are not correlated, allowing for the identification of the individual effect of each variable on demand.

The Identification Problem Is Dealt with in Practice by Including