The Purpose of the Ceteris Paribus Assumption Used in Economic

question 131

Multiple Choice

The purpose of the ceteris paribus assumption used in economic analysis is to

• A) avoid making normative statements.
• B) distinguish macroeconomics from microeconomics.
• C) make sure that all relevant factors are considered.
• D) focus on the effect of a single factor on a certain variable.

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Definitions:

Insurance Premium

The sum of money required to be paid by a person or company for obtaining an insurance coverage.

Risk-Averse

A description of an individual or entity that prefers to avoid risk, choosing safer options over potentially higher-reward alternatives.

Marginal Utility

The extra pleasure or benefit a person gains from consuming an additional unit of a product or service.

Risk Aversion

A preference for options with fewer risks and more predictable outcomes, often influencing investment and consumption behaviors.