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Chapter 3: Q. 2 (page 77)

Why do economists use the ceteris paribus assumption?

Short Answer

Expert verified

To determine causation.

Step by step solution

01

Step1. Introduction

Ceteris Paribus is an important assumption, often use in economic theories and models. The latin phrase literally translates to with other things the same. In economics, its use is same as saying- other things being equal or held constant

02

Step2. Explanation

Ceteris Paribus is an important assumption in economics to determine causation. Primarily, when understanding the effect of one independent variable on the dependent variable, the effects of other independent variables need to be held constant. That is exactly what we try to attain by asserting the assumption of Ceteris Paribus.

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