Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. (30} Your best friend from high school has invented a delicious taco called The Robust. They sell it out of 40 food trucks at
3. (30} Your best friend from high school has invented a delicious taco called "The Robust.\" They sell it out of 40 food trucks at different locations in California. Your friend would like your help estimating a demand curve for their taco. 3A. Your friend gives you the data from a day of taco sales at each of the 40 food trucks, and asks you to estimate a demand curve. They let each taco truck driver set their own price, so there's lots of variance in prices. OJ=BD+BIPi+Ui ,l=1t040. You look at the data and discover that the correlation of Q and P is positive in this sample. Your friend laughs at you, --they learned in high school that demand curves slope downwards. Explain how a positive correlation of Q and P might happen, by describing at least one real life omitted variable that might result in a positive correlation, and using the terms linear causal effect and the omitted variable bias formula
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started