If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds:
A) students' incomes fall.
B) tuition decreases.
C) the number of students increases.
D) everything else is constant.
E) the bookstore no longer accepts used book trade-ins.

Question

Quizplus · Accepted Answer

The economic model would need to hold constant all other variables that could potentially impact the relationship between the price of the textbook and the quantity demanded. By holding everything else constant, we can isolate the effect of the price increase on the decrease in quantity demanded. Any other changes in the variables such as student income, number of students, or bookstore practices could also impact the quantity demanded, making it difficult to determine the cause-and-effect relationship between price and quantity demanded.

If the Price of a Textbook Rises and Then Students