Why Should We Expect to Estimate the Treatment Effect of Price

question 35

Multiple Choice

Why should we expect to estimate the treatment effect of price on quantity sold to be so difficult in nonexperimental data?

• A) Firms are not likely to keep detailed records of their prices.
• B) Obtaining actual quantity information from sales records is difficult.
• C) Firms vary their prices strategically in response to expectations of the resulting sales.
• D) Sales taxes create wedges between prices paid and revenue received by the firm.

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Definitions:

Socialized

A rephrased definition: The state of being acclimated and integrated into the customs, norms, and practices of a society or group.

Achieved Status

A status earned through individual effort or imposed by others.

Resocialization

The process of learning new norms, values, attitudes, and behaviors to match a new situation in life.

Total Institution

A place where people are isolated from the rest of society and controlled by an administrative staff, often including prisons, military bases, or mental hospitals, as described by Erving Goffman.