In building a model to analyze economic situations, one of the important assumptions is
A) ceteris paribus.
B) scarcity.
C) conversion abstraction.
D) cognitive dissonance.

Question

Quizplus · Accepted Answer

Ceteris paribus, meaning "all other things being equal," is an important assumption in economic modeling because it allows economists to isolate the effects of a single variable on the overall economic situation. By holding all other variables constant, economists can analyze the impact of changes in one variable on the economy as a whole. This assumption allows for more accurate predictions and insights into economic phenomena. Scarcity is an economic reality, not an assumption. Conversion abstraction is not a commonly used term in economics. Cognitive dissonance is a psychological concept, not an economic assumption. Therefore, the best answer is A) ceteris paribus.

In Building a Model to Analyze Economic Situations, One of the Important