If an economist finds that when consumer incomes increase, consumers buy more cars, Ceteris paribus , then
A) the price of cars must be decreasing.
B) all other things remain constant.
C) the price of gas must be decreasing.
D) the interest rate on car loans must be decreasing.

Question

Quizplus · Accepted Answer

Ceteris paribus means that all other things remain constant, so the economist is assuming that the price of cars, the price of gas, and the interest rate on car loans are not changing. Therefore, the increase in consumer incomes is directly causing the increase in car purchases.

If an Economist Finds That When Consumer Incomes Increase, Consumers