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

question 44

Multiple Choice

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.

---

Definitions:

Convertible Currency

A currency that can be exchanged for other currencies on foreign exchange markets.

Market Determined Rates

Interest rates that are established by the supply and demand forces in the financial markets without direct government control.

International Trade

The exchange of goods, services, and capital across international borders or territories, influencing global economy and business practices.

Eurobond

An international bond issued in a currency not native to the country where it is issued.