Question

Which of the following accurately explain the importance of the ceteris paribus assumption for an economic model? Check all that apply. It allows economists to incorporate association in the economic model. It allows economists to study all the variables that can possibly be included in the model. It allows economists to isolate or focus attention on selected variables. It allows economists to incorporate causation in the economic model.

Answer 1

Answer:

The correct answer is:  It allows economists to isolate or focus attention on selected variables.

Explanation:

The word ceteris paribus means other things being constant. The working of an economy is very complex, each variable is affected by a number of variables. It is difficult to understand all the complex relationships at the same time.

The assumption of ceteris paribus or other factors being constant helps the economists in isolating the variables that they want to study while keeping others constant.

It simplifies the study of economic models and helps to easily grasp the working of the economy.