In Order to Study How Changing Price Affects Consumer Decisions

question 274

Multiple Choice

In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as

• A) rationality.
• B) ceteris paribus.
• C) normative economics.
• D) behavioral economics.

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Definitions:

Rising Incomes

An economic condition characterized by a general increase in the level of wages, salaries, and profits across a population or economy.

Population Growth

The increase in the number of individuals in a population, often measured as a percentage of growth over a specific period of time.

Capital Flight

The transfer of savings from developing countries to industrially advanced countries to avoid government expropriation, taxation, or higher rates of inflation, or simply to realize greater returns on financial investments.

Export Earnings

The revenue a country or business receives from selling goods and services to other countries.