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In Estimating the Causal Relationship Between Sales and Price in the Following

Question 43

Multiple Choice

In estimating the causal relationship between Sales and Price in the following determining function Salesi = β0 + β1Pricei + Ui, what assumption in addition to E [Ui ] = 0, justifies that the estimated coefficient on Price can be interpreted as an estimate of the causal effect of Price on Sales?


A) E [PriceiUi ] = 0
B) E [SalesiUi ] = 0
C) E [PriceiUi ] = β0
D) E [PriceiUi ] = β1

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