Econ Unit 1 concepts

What does the "ceteris paribus" assumption mean?

• Holding other things constant

• Changing all variables

• Ignoring all factors

• Focusing on multiple variables

Why is the "ceteris paribus" assumption used in economics?

• To complicate the analysis

• To isolate the effect of a specific variable

• To change all variables simultaneously

• To ignore economic relationships

How does the "ceteris paribus" assumption help economists?

• It allows for the analysis of multiple variables at once

• It simplifies the relationship between variables

• It complicates the economic models

• It ignores the influence of external factors

What does the Law of Demand state under the ceteris paribus assumption?

• When the price of a good increases, the quantity demanded increases.

• When the price of a good decreases, the quantity demanded decreases.

• When the price of a good decreases, the quantity demanded increases.

• When the price of a good increases, the quantity demanded remains constant.

Which of the following is a substitute for electric vehicles?

• Bicycles

• Diesel/petrol cars

• Electric scooters

• Walking

What does the ceteris paribus assumption help economists understand in relation to supply?

• The impact of technology on production costs

• The relationship between market price and quantity supplied

• The effect of government regulations on taxes

• The influence of subsidies on demand

What does marginal utility represent?

• The total satisfaction from consuming all units of a good

• The additional satisfaction from consuming one more unit of a good

• The decrease in satisfaction from consuming one more unit of a good

• The cost of producing one more unit of a good

What does behavioral economics study?

• The impact of technological factors on economic decisions

• The impact of psychological, social, and emotional factors on economic decisions

• The impact of environmental factors on economic decisions

• The impact of political factors on economic decisions

Why is the ceteris paribus assumption often dropped in behavioral economics?

• To simplify economic models

• To focus on a single variable

• To capture the nuances of human behavior

• To ignore external factors

What is the primary benefit of the ceteris paribus assumption in economics?

• It allows for the prediction of future economic trends.

• It simplifies complex economic relationships.

• It ensures all economic variables remain constant.

• It eliminates the need for economic models.