What is ceteris paribus?

Answer 1

Ceteris paribus is a Latin phrase that translates to mean "other things being equal". It is the assumption that other factors are kept constant while investigating a particular relationship. This way, investigators (whether scientists or economists) are simplifying their analysis making it easier to observe and identify relationships. For example, if an economist wants to study the relationship between the apple market and banana market, he would use the ceteris paribus assumption to cancel things like an increase in the technology of growing apple (?) or the drought affecting the production of bananas (I apologize if my two conditions make no logical sense, I am terrible at making up examples). This way s/he would be able to observe the direct relationships of the two products and not have to take into consideration the outside factors contributing.

Improving upon the previous example: If people substitute between bananas and apples and the price of apples rise, then CETERIS PARIBUS the demand for bananas will rise. Ceteris Paribus means hold all other factors constant - i.e. the technological increase in apple farming vs that of banana farming, etc.