Key Takeaways. Ceteris paribus is a Latin phrase that generally means “all other things being equal.” In economics, it acts as a shorthand indication of the effect one economic variable has on another, provided all other variables remain the same.

What is ceteris paribus and example?

Ceteris paribus is where all other variables are kept equal. For example, if the price of Coca-Cola falls, ceteris paribus, its demand will increase. Ceteris paribus means that other factors are not considered, or are considered to remain constant.

What does ceteris paribus mean and why is it important?

In economics, the assumption of ceteris paribus, a Latin phrase meaning “with other things the same” or “other things being equal or held constant,” is important in determining causation. It helps isolate multiple independent variables affecting a dependent variable.

Is ceteris paribus a theory?

Ceteris paribus (se-ter-es pa-re-bes) is a Latin phrase that means “all other things being equal.” Experts use it to explain the theory behind laws of economics and nature. It means that something will occur as a result of something else most of the time, if nothing else changes.

What is another name for ceteris paribus?

Ceteris paribus can be translated into “all other things being equal” or “holding other factors constant.” For economic analysis, ceteris paribus means that when considering the effect of one economic variable on another, all other factors that may affect the second variable are held constant.

Who found ceteris paribus?

In economic contexts the use of ceteris paribus clauses can be traced back to Petrus Olivi in 1295.

How does ceteris paribus relate to demand?

Ceteris paribus assumption.

Demand curves relate the prices and quantities demanded assuming no other factors change. This is called the ceteris paribus assumption. This article talks about what happens when other factors aren’t held constant.