Explain the importance of the cerise caribous or “other-things-equal” assumption
Please provide the best answer for the statement.
Because economics is concerned with real-world behavior, it is impossible to develop theories about economic relationships in a laboratory setting where the variables of interest could be isolated. Economists try to analyze changes in the variables of interest by finding ways to hold “other things constant or equal.”
Thus, the cerise caribous assumption is made to indicate that these other variables are not changing or affecting the variables of interest. For example, the theory of consumer demand states that price and quantity demanded are inversely related; people will buy less at higher prices than they will at lower prices. But this theory assumes that other variables that might affect quantity demanded are not changing. This assumption is the cerise caribous assumption.
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The above table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. The expenditure multiplier is equal to
A) 1.25. B) 10. C) 0.8. D) 2. E) 5.
The "Superbowl Effect" mentioned in your textbook is considered a fallacy or a mistake in reasoning because it's wrong to believe
A) one event always causes another to happen if it comes before the other. B) if you gain, I must lose. C) the whole must always be equal to the sum of its parts. D) what is true in one society will always be true in all societies. E) whatever goes up must come down again.