Why is the ceteris paribus assumption important?
A) It allows one to separate normative economic issues from positive economic ones.
B) It allows one to analyze the relationship between two variables apart from the influence of other variables.
C) It allows one to hold all variables constant so the economy can be carefully observed in a suspended state.
D) It allows one to generalize from the whole to the individual.

Question

Quizplus · Accepted Answer

The ceteris paribus assumption allows economists to isolate the effect of one variable on another, holding all other variables constant. This is important because it helps to identify cause-and-effect relationships and better understand economic phenomena.

Why Is the Ceteris Paribus Assumption Important