When the ceteris paribus assumption is violated in economics, the effect is shown by
A) a movement down along the curve.
B) a movement up along the curve.
C) a shift of the entire curve.
D) correlation but not causation.

Question

Quizplus · Accepted Answer

When the ceteris paribus assumption is violated, it means there are changes in factors that are not accounted for in the analysis. This leads to a shift of the entire curve, as the relationship between the two variables being analyzed changes. A movement up or down along the curve would indicate a change in price or quantity demanded/supplied due to changes in that variable alone, while a shift of the curve would show changes in other factors affecting the relationship. Correlation but not causation would only be relevant if there is no causal relationship between the two variables being analyzed.

When the Ceteris Paribus Assumption Is Violated in Economics, the Effect