Which of the following is an example of an application of the ceteris paribus assumption?
A. an analysis of how price changes affect how much of a good people will purchase when all other factors are held constant
B. an analysis of how worker productivity increases when a firm invests in new machines and training programs
C. an analysis of how people purchase more goods when prices decline and income increases
D. After reading an article on the dangers of high-fat diets, an individual buys less red meat when prices increase.
Answer: A
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Economists usually assume that people act in a rational, self-interested way. In explaining how consumers make choices this means that economists believe
A) consumers will spend their incomes and time on activities that benefit themselves as much as possible, without regard to the welfare of others. B) consumers spend their incomes to order to accumulate the most goods and services. C) consumers make choices that will leave them as satisfied as possible given their incomes, tastes, and the prices of goods and services available to them. D) consumers will always buy goods and services at the lowest possible prices.
According to the Gordon-Growth model, what is the value of a stock with a dividend of $2, required return on equity of 8% and expected growth rate of dividends of 4%?
A) $25 B) $26 C) $50 D) $52
What percentage of U.S. healthcare expenditures is currently paid for by a third party, either the government or an insurance company?
a. less than 10 percent b. approximately 30 percent c. approximately 50 percent d. more than 85 percent
Japan's currency is called Yen. The value of Japan's income per capita in dollars is high if ________
A) the value of Japan's income per capita in yen is low B) the income per capita of the U.S. is high C) the dollar/yen exchange rate is high D) the dollar/yen exchange rate is low