Suppose an economist says that "other things equal,the lower the price of bananas,the greater the amount of bananas purchased." This statement indicates that:
A) the quantity of bananas purchased determines the price of bananas.
B) all factors other than the price of bananas (for example,consumer tastes and incomes)are assumed to be constant.
C) economists can conduct controlled laboratory experiments.
D) one cannot generalize about the relationship between the price of bananas and the quantity purchased.

Question

Quizplus · Accepted Answer

The statement "other things equal, the lower the price of bananas, the greater the amount of bananas purchased" implies that the economist is assuming all other factors that affect banana demand, such as consumer tastes and incomes, are constant. This assumption is known as ceteris paribus. Therefore, the correct answer is B.

Suppose an Economist Says That "Other Things Equal,the Lower the Price