The assumption that all factors remain constant except for the variables being s

Question

The assumption that all factors remain constant except for the variables being studied is called: The circular-flow diagram illustrates how firms goods and services and factors of production. Which example illustrates the law of demand? (Figure: Demand for DVDs) Examine the figure Demand for DVDs. A decrease in the price of movie tickets (a substitute to DVDs) would result in a change illustrated by: In the local market for coffee, what would happen if Joyce's Java and Everyday Joe's coffee shops go out of business? O The supply curve shifts to the right. (Figure: Supply of Coconuts) Examine the figure Supply of Coconuts. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts increased, it would be represented in the figure as a movement from:

Explanation / Answer

1) (c) ceteris paribus

When using ceteris paribus in economics, assume all other variables except those under immediate consideration are held constant.

2) (c) sell, buy

3) (b) consumer buy more computers because price has fallen

Reason: A microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa.

4) (a) move from f to g in panel A

SInce demand will reduce as price of substitue has fallen, less people will buy dvd's at the same price

5) (c) The supply curve shifts to the left

Since the 2 stores are out of business

6) (c) C to A

Since price is increased there will be less demand and hence less supply

7) (b) 175, $0.60

SInce quantity demanded and supplied are same

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