Read this brief text to learn the formal definition of ceteris paribus. As a practice activity, identify a variable and list the multiple factors that may be influencing it. For example, say you are planning to request an increase in your salary. What are the factors that influence your salary? Do you think you can attribute the change in your salary to any one of these factors if all of the factors influencing it were simultaneously changing?
Ceteris paribus is defined as "all else being equal", or "holding all else constant".
- Explain the rationale for the assumption of ceteris paribus
- When ceteris paribus is
employed in economics, all other variables with the exception of the
variables under evaluation are held constant.
- An example of the use of ceteris paribus in macroeconomics is:
what would happen to the demand for labor by firms if a minimum wage was
imposed at a level above the prevailing wage rate, ceteris paribus.
- An example of the use of ceteris paribus in microeconomics is:
what would happen for the demand for a normal good when income
increases, ceteris paribus.
- ceteris paribus: all else equal; holding everything else constant
Economics seeks to interpret, analyze and or evaluate situations that
occur between individuals, firms and other entities. Due to the
potential for multiple agents and other known and unknown external
activities to be involved or present but not relevant
to an analysis, economics employs the assumption of "all else
constant," which is the English translation of the Latin phrase "ceteris
When the ceteris paribus assumption is employed in economics, all
other variables – with the exception of the variables under evaluation –
are held constant.
Source: Lumen Learning, https://courses.lumenlearning.com/boundless-economics/chapter/demand/
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