Question

a) Relationships between sets economic variables must always be qualified by the "ceteris paribus" phrase. What does this phrase means, and how relevant is it for the development of economic theory?

b) What are the steps in the scientific methodology used by economists to investigate economic relationships.

Answer 1

a. Ceteris paribus refers to the notion in economics meaning all other things remaining constant. This means that when we are explaining one concept the other conditions remain constant and have no change.

Relationships between sets economic variables must always be qualified by the "ceteris paribus" phrase. This is very important for the development of economic theory because in the real world, it is usually hard to isolate all the different variables that may influence or change the outcome of what you are studying.  It is particularly crucial in the study of cause and effect relationship between two specific variables such that other relevant factors influencing these are assumed to be constant by the assumption of Ceteris Paribus.

b. The steps in the scientific methodology used by economists to investigate economic relationships are:

Identification of a problem

Gathering data about the same

Forming hypothesis about it which is simply a prediction about the problem

Testing the hypothesis

Analysis of the results

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