Economists Use the Ceteris Paribus Assumption Primarily in Order to

question 127

Multiple Choice

Economists use the ceteris paribus assumption primarily in order to

• A) make their analyses easier for them to conduct.
• B) designate what they believe is the correct relationship between two variables.
• C) explain why people sometimes consume more of a good when its price rises.
• D) explain why those things that come first do not necessarily cause those things that come later.
• E) designate the difference between normative and positive economics.

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Definitions:

Benefits

Advantages or financial assistance received from employment, government, or insurance, aimed at improving individuals’ well-being.

Costs

The expenses incurred in the production or acquisition of goods and services, including both direct and indirect expenditures.

Inelastic Demand

A situation in which the percentage change in quantity demanded of a good is less than the percentage change in price, indicating low sensitivity to price changes.

Tax Burden

The total amount of taxes that individuals, businesses, or other entities are obligated to pay, often expressed as a percentage of income or GDP.