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Common assumptions that when changed would have a big impact on a recommendation

a) Variables, constants, and parameters
b) Assumptions, constraints, and limitations
c) Independent, dependent, and control variables
d) Factors, variables, and data points

1 Answer

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Final answer:

Economic assumptions like ceteris paribus are crucial for analyzing how variables affect demand and showing the effects graphically. Changes to these assumptions can significantly alter the analysis and recommendations in economic studies.

Step-by-step explanation:

The question is pertaining to how changing certain underlying assumptions can significantly impact the outcomes or recommendations in an economic analysis, particularly regarding demand. These assumptions include holding other variables constant, known as the ceteris paribus assumption.

This concept is key in economics as it allows us to isolate the effect of one variable on another, such as how a change in price impacts market demand, while other factors remain unchanged.

In experimental design, preventing confounding from lurking variables is crucial, and this is accomplished through random assignment to treatment groups to ensure that only the variable of interest, the explanatory variable, differs across groups.

The ceteris paribus assumption is necessary to graphically show the effects of demand changes and to understand the regularities in measurements. It simplifies the complex real-world situations into a manageable model where the relationship between dependent and independent variables can be observed without the interference of other variables.

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