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Chapter 3: Q 2. (page 77)

Why do economists use the ceteris paribus assumption?

Short Answer

Expert verified

The ceteris paribus assumption is used by economists to simplify the analysis of difficult problems.

Step by step solution

01

Step 1. What is ceteris paribus?

Ceteris paribus is a Latin word that roughly translates as "everything else being equal." a According to economists, it serves as a quick indicator of the impact of one economic indicator on another, assuming that all other factors remain constant.

02

Step 2. What is the ceteris paribus assumption and why is it used by economists?

The ceteris paribus assumption is used by economists to simplify the analysis of difficult problems. Ceteris paribus permits you to examine the impact of one thing at a time on whatever you're attempting to figure out. You add the data together to reach the final answer after you've studied all of the components individually.

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