Ceteris Paribus

What is Ceteris Paribus?

Ceteris Paribus is Latin for “all other things being equal.” It is commonly used in situations to explain a causal relation between two variables while holding all exogenous factors constant. A classic economics example would be if the price of apples increases – ceteris paribus – then the demand for apples will decrease. It means that if all other variables are held constant, and there is an increase in the price of apples, the demand for apples should decrease.

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