Ceteris paribus
Topic: Scarcity, Choice and Economic Systems · NCERT: Class 12, Ch 4 "Determination of Income and Employment"
Meaning
Ceteris paribus is Latin for "other things remaining equal". Economists use it as an assumption: they hold every other variable constant while they study the effect of one change. This lets them isolate a single cause and its effect. Without it, many things change at once and no clear conclusion can be drawn.
Example
"When the price of onions rises, people buy fewer onions, ceteris paribus." Here income, tastes and the prices of other vegetables are assumed not to change. Only then can the fall in purchases be put down to the higher price alone.
Related concepts
- Positive economic analysis
- Normative economic analysis
- Microeconomics
- Macroeconomics
- Representative good