CH 2

Question 1

What does the term ceteris paribus mean?

Answer 1

It is a Latin term meaning ‘with all other things the same’ or ‘all else equal’

Ceteris paribus allows for the analysis of variables in isolation.

Question 2

What is the primary purpose of using the assumption ceteris paribus in economics?

Answer 2

To analyze and explain variables by isolating them

This assumption helps in comparing and contrasting two variables while keeping other factors constant.

Question 3

How does ceteris paribus simplify the study of complicated situations?

Answer 3

By allowing the isolation of specific variables

This simplification makes it easier to understand complex economic scenarios.

Question 4

True or False: Ceteris paribus means that all other factors are allowed to change.

Answer 4

False

Ceteris paribus assumes that all other factors remain constant.

Question 5

What does ‘Ceteris Paribus’ mean?

Answer 5

‘With all other things the same’ or ‘All else equal’

Latin phrase used in economics to indicate that all other variables are held constant.

Question 6

Why is ‘Ceteris Paribus’ important in economics?

Answer 6

It helps to understand a situation separately from other factors

It allows for the analysis of individual variables by isolating them.

Question 7

What are some alternative phrases for ‘Ceteris Paribus’?

Answer 7

• ‘All other things held constant’
• ‘All else equal’

These phrases convey the same concept of isolating variables in analysis.

Question 8

What does ‘Ceteris Paribus’ allow economists to do?

Answer 8

Compare and contrast two variables while keeping others the same

This simplification aids in the study of complex situations.

Question 9

Fill in the blank: ‘Ceteris Paribus’ is a presumption used to analyze and explain variables by _______.

Answer 9

[isolating them]

Question 10

Give an example of a situation where ‘Ceteris Paribus’ might be applied.

Answer 10

The impact of an increase in minimum fare from Php 8.00 to Php 8.50 on the price of carrots

This example illustrates how one variable (minimum fare) can be analyzed while other factors remain constant.

Question 11

What are some possible factors that could affect the price of carrots aside from minimum fare?

Answer 11

• Weather
• Price of petroleum
• People who do not eat carrots
• Season
• Other vegetables

These factors must be considered in a real-world scenario but are isolated when using ‘Ceteris Paribus’.