If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then the economist is assuming
A) the price of cars must be decreasing.
B) all other things remain constant.
C) the price of gas must be decreasing.
D) the interest rate on car loans must be decreasing.

Question

If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then  the economist is assuming
A) the price of cars must be decreasing.
B) all other things remain constant.
C) the price of gas must be decreasing.
D) the interest rate on car loans must be decreasing.

Quizplus · Accepted Answer

Ceteris paribus means "all other things being equal," so the economist is assuming that all other factors that could influence car purchases (such as gas prices, car loan interest rates, etc.) remain constant. The answer cannot be A, C, or D because the economist did not make any assumptions about those specific factors.

If an Economist Finds That When Consumer Incomes Increase, Consumers