Question

​The manager of an ice-cream parlor decides to introduce a new ice-cream flavor in his Dallas, TX based restaurants to compare the sales of these restaurants to the ones with no new flavors. She decides to run a difference in difference approach. Which of the following is true?
(A) The first difference would be the difference in the sales of the Dallas stores before and after the introduction
(B) The second difference would be the difference in the sales in other stores before and after the Dallas stores introduced the new flavor
(C) The second difference would be the difference between the post introduction sales in the Dallas stores and the control group
(D) Only A&B

Answer 1

Answer:

(D) Only A&B

Explanation:

As with the introduction of new flavors, there will be an impact on sales, it might increase or it might decrease.

The impact would not only affect the store itself but would also impact on nearby stores.

Therefore, there will be difference in the sales count in value as well as units in current and previous months.

There will also be difference in between, the sales of stores nearby in previous month and current month after the launch of new flavor.