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.

all other things being equal

Ceteris Paribus. A Latin term meaning “all other things constant”, or “nothing else changes”. The assumption in economics that nothing else changes in a given situation except for the stated change.

Answer Expert Verified The Latin phrase ceteris paribus means “B. Everything else remains constant,” or sometimes it is translated as “all other things remaining equal,” since this phrase is often used in academia and the law.

When we drop the ceteris paribus rule and allow other factors to change, we no longer move along the demand curve. A shift in the demand curve means that at every price, consumers buy a different quantity than before. This shift of the entire curve is what economists refer to as a change in demand.

Supply curve shift: Changes in production cost and related factors can cause an entire supply curve to shift right or left. This causes a higher or lower quantity to be supplied at a given price. The ceteris paribus assumption: Supply curves relate prices and quantities supplied assuming no other factors change.

How can population changes affect demand for certain goods? More people demanding goods will cause prices to rise. If goods are used together, increase demand for one will increase demand for the other.

Application of Ceteris Paribus As another example, take the laws of supply and demand. Economists say the law of demand demonstrates that ceteris paribus, more goods tend to be purchased at lower prices. Or that, if demand for any given product exceeds the product’s supply, ceteris paribus, prices will likely rise.

Other things that change demand include tastes and preferences, the composition or size of the population, the prices of related goods, and even expectations. A change in any one of the underlying factors that determine what quantity people are willing to buy at a given price will cause a shift in demand.

Definition – Supplementary goods are two goods that are used together. For example, if you have a car, you also need petrol to run the car.

A substitute, or substitutable good, in economics and consumer theory refers to a product or service that consumers see as essentially the same or similar-enough to another product. Put simply, a substitute is a good that can be used in place of another.

Fungible goods