Suppose you are interested in the causal effect of price on your product's sales. However, you recognize that simply regressing sales on price will almost certainly suffer from an endogeneity problem. Your manager asks how to deal with this problem, and you suggest finding an instrumental variable, Z. a. What properties must Z possess in order to be a valid instrument for this particular problem? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. ? Z does not move along with price (even after including controls). ? Z helps determine sales (beyond the set of controls we are able to include in a regression). ? Z does not help determine sales (beyond the set of controls we are able to include in a regression). ? Z moves along with price (even after including controls). b. Explain in nontechnical terms how, if Z is a valid instrument, it can allow us to measure the causal effect of price on sales... I

Suppose you are interested in the causal effect of price on your product's sales. However, you recognize that simply regressing sales on price will aimost certainly suffer from an endogeneity problem. Your manager asks how to deal with this problem, and you suggest finding an instrumental variable, Z. a. What properties must Z possess in order to be a valid instrument for this particular problem? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. Z does not move along with price (even after including controls). 2 helps determine sates (beyond the set of controls we are able to include in a regression). Z does not help determine sales (beyond the set of contrls we ore able to include in a regression). 2 moves along with price feven after including controls) b. Explain in nontechnical terms how, if Z is a valid instrument, it can allow us to measure the causal effect of price on sales