Question

Suppose an economist says that "Ceteris paribus, the lower the price of Wheaties, the

larger the amount of Wheaties purchased," This statement indicates that:
A) economists can conduct controlled laboratory experiments.
B) all factors other than the price Of Wheaties arc assumed to be constant
C) the quantity of Wheaties purchased determines the price of Wheaties
D) one cannot generalize about the relationship between the price of Wheaties and the quantity
purchased.

Answer 1

The economist's statement indicates that the relationship between the price of Wheaties and the quantity purchased is being analyzed while assuming that all other factors affecting demand and supply remain constant.

Step-by-step explanation:

The economist's statement indicates that the relationship between the price of Wheaties and the quantity purchased is being analyzed while assuming that all other factors affecting demand and supply remain constant. This is what the ceteris paribus assumption means. For example, if the price of Wheaties decreases, assuming all other factors remain unchanged, it is expected that the amount of Wheaties purchased will increase.