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Economic choice

The economic choice model is central in many economic paradigms such as the classical, neoclassical and modern paradigms. For example, in the aforementioned economic paradigms and other related paradigms, one of the factors affecting market mechanisms and consumer/supplier decisions is price. The economic choice model in microeconomics combined with the economic notion of utility maximization leads to widely accepted theorems such as revealed utility preferences through prices.

The economic choice model is also central in economics in distinguishing between economic factors and non-economic factors. In a way, the economic choice model allows for economists to consider a "definable" number of terms in economic decision making as oppose to the infinite possibilities that could affect economic agents in their decision making. In this fashion, economists can concentrate on changes in specific factors such as price and treat other factors as constant. The factors that are treated as constant can be those that are either already incorporated in the economic model or those that are not considered in the economic model. The implicit concentration on changes in one factor while assuming that the others have remained constant is usually referred to as "ceteris paribus" in economics. This latin term literally translates to "all other things being equal". Therefore, by incorporating this vital component in the economic choice model, for example it becomes possible to study the interaction of the change in a seller's price of a commodity and the quantity demanded by consumers at that price without being distracted by other factors such the quality of the commodity that could or could not have changed in the new scenario.

Last updated: 10-29-2005 02:13:46