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Question

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:



A

 other relevant factors like consumer incomes must be held constant.

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B

the gasoline prices must first be adjusted for inflation.

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C

the theory is widely accepted but cannot be accurately tested.

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D

consumers' need for gasoline remains the same regardless of the price.

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Solution

The correct option is B

 other relevant factors like consumer incomes must be held constant.


The phrase "Ceteris paribus" means other relevant factors like consumer incomes must be held constant.


Micro Economics

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