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Chipotle wants to run an experiment to estimate the demand elasticity for its customers who consume pork burritos. Chipotle raises the price of pork burritos 5% in half of its restaurants, but keeps the price of pork burritos unchanged in the other half. After a month, sales of pork burritos are down 7.5% in the restaurants that increased price, while sales of pork burritos are down 2% in the restaurants that didn’t increase price (note: these numbers are changes, i.e. the difference between before and after). What is the difference-in-difference estimate of the demand elasticity?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91796104

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