ceteris paribus

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Ceteris Paribus

Literally, a Latin phrase meaning "with other things the same." In economic and financial models, ceteris paribus is a shorthand indicating that the model holds true if other market forces do not intervene. One often finds "ceteris paribus" in simple models and in simplifications of complex models. For example, one might say: "If supply decreases, price increases, ceteris paribus." The statement is true assuming constant (and substantial) demand regardless of supply, among other factors. Ceteris paribus acknowledges other facts without letting them overwhelm the point of the model.

ceteris paribus

a Latin term meaning ‘other things being equal’ that is widely used in economic analysis as an expository technique. It allows us to isolate the relationship between two variables. For example, in demand analysis, the DEMAND CURVE shows the effect of a change in the price of a product on the quantity demanded on the assumption that all of the ‘other things’ (incomes, tastes, etc.) influencing the demand for that product remain unchanged.