In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as
A) rationality.
B) ceteris paribus.
C) normative economics.
D) behavioral economics.

Question

Quizplus · Accepted Answer

The assumption that all other factors are constant except for the price being studied is known as ceteris paribus. Rationality refers to the idea that consumers make decisions based on their own self-interest. Normative economics involves making value judgments about economic policies, while behavioral economics examines how human psychology and emotions affect economic decisions.

In Order to Study How Changing Price Affects Consumer Decisions