"If the price of home heating oil rises, ceteris paribus, people will buy less home heating oil." This statement is equivalent to which of the following?
A) The relationship between the price of home heating oil and the amount of oil households purchased are independent of each other.
B) If the price of home heating oil rises and every thing else remains constant, the amount of home heating oil households purchase will decrease.
C) As the prices for all products including home heating oil rise, people buy less home heating oil.
D) Because the only way to heat a home is with oil, if the price increases, then households will purchase less.
E) No matter what else changes, if the price of home heating oil rises, people will buy less home heating oil.

Question

Quizplus · Accepted Answer

The statement is saying that there is a negative relationship between the price of home heating oil and the amount that people purchase, holding all other factors constant (ceteris paribus). Option B states the same thing in slightly different words. The other options either do not capture the nuance of the statement or make incorrect generalizations.

"If the Price of Home Heating Oil Rises, Ceteris Paribus