Asked by Timyia Thomas on Jul 21, 2024
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The other-things-constant assumption:
A) allows the economist to make useful predictions.
B) is a prediction.
C) applies only to consumers' decisions and not to those of firms.
D) forces the economist to ignore reality,where things are constantly changing.
E) implies rational self-interest on the part of all economic actors.
Other-Things-Constant Assumption
The assumption, when focusing on the relation among key economic variables, that other variables remain unchanged; in Latin, ceteris paribus.
Rational Self-Interest
Each individual tries to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit.
Economic Actors
Individuals, companies, and organizations involved in the production, distribution, and consumption of goods and services.
- Recognize the significance of assumptions in constructing economic models.
- Familiarize oneself with the contribution of predictions to economic theories and models.
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Learning Objectives
- Recognize the significance of assumptions in constructing economic models.
- Familiarize oneself with the contribution of predictions to economic theories and models.
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