Limitations of using experimentation to estimate demand elasticities include:

Question

Quizplus · Accepted Answer

Experiments can be difficult in isolating the impact of price from other factors affecting demand, such as changes in the economy, consumer preferences, or competitor actions. This can lead to inaccurate estimates of demand elasticities. While determining which product's elasticity to estimate and getting customers to buy the product can also be challenges, they are not inherent limitations of using experimentation as a method for estimating demand elasticities. Difficulty in being able to filter out valid facts from the information set is also not a specific limitation of using experimentation in estimating demand elasticities.

Limitations of Using Experimentation to Estimate Demand Elasticities Include