Ceteris paribus

Ceteris paribus simply means "all things being equal". The phrase is often used in economic theory and modelling in order to indicate that a particular relationship between two quantities holds providing that nothing else changes.

For example, demand for a particular good will depend on its price, but it will also depend on incomes, prices of substitutes, prices of complementary goods, etc. This means that it is simplest to describe the relationship between price and demand ceteris paribus, meaning that it is assumed that all the other factors are unchanged.

Of course, a realistic model will usually require that many factors are modelled, but a ceteris paribus analysis can help understand relationships in order to construct a model.

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