Why does the ceteris paribus assumption allow economists to focus on the variable they are interested in? Give an example.
What will be an ideal response?
The ceteris paribus assumption means that other variables besides the variable the economists are interested in studying are held constant. As a result, economists are able to focus on the effect of the variable they want to study. For example, let’s say economists want to study the effect of changes of the price of sugar on demand. To do this, they hold other variables, such as consumer’s tastes and the quality of sugar, constant. By doing this, they can analyze how changes in the price of sugar affects demand.
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Centralization of all decision making in an organization is essential to protect the interests of its shareholders
Indicate whether the statement is true or false
If the MPS = 0.25, and intended investment falls from $100 to $75, national income will decrease by
a. $25 b. $75 c. $150 d. $125 e. $100
The GDP growth rate:
A. is measured as the percent change in real GDP from one time period to the next. B. is a measure to track changes in an economy over time. C. looks at changes in GDP across different time periods. D. All of these statements are true.
If the number of highway deaths among young people is roughly proportional to their beer consumption, and young people's elasticity of demand for beer is 1.5, then to decrease highway deaths of young people by 15 percent, taxes would need to be increased enough to increase the price of beer by:
A. 1%. B. 1.5%. C. 10%. D. 15%.