Comparative statics:
A)examines how exogenous variables change as endogenous factors change.
B)examines how endogenous variables change as exogenous factors change.
C)presents a comparison of two separate markets at a single point in time.
D)is often rendered useless because exogenous variables can never be expected to remain constant for long.

Question

Quizplus · Accepted Answer

Comparative statics involves examining how endogenous variables change as exogenous factors change. It is used to analyze the effects of changes in policy or market conditions on economic outcomes, assuming that all other factors remain constant. While exogenous variables may not remain constant indefinitely, this does not render comparative statics useless, as it can still provide valuable insights into short-term changes in economic behavior. Comparative statics examines how endogenous variables change as exogenous factors change. It does not examine how exogenous variables change as endogenous factors change (A). It also does not focus on comparing two separate markets at a single point in time (C) or render itself useless because exogenous variables can never be expected to remain constant for long (D).

Comparative Statics