Ceteris Paribus

AAA

DEFINITION of 'Ceteris Paribus'

Latin phrase that translates approximately to "holding other things constant" and is usually rendered in English as "all other things being equal". In economics and finance, the term is used as a shorthand for indicating the effect of one economic variable on another, holding constant all other variables that may affect the second variable.

INVESTOPEDIA EXPLAINS 'Ceteris Paribus'

For example, when discussing the laws of supply and demand, one could say that if demand for a given product outweighs supply, ceteris paribus, prices will rise. Here, the use of "ceteris paribus" is simply saying that as long as all other factors that could affect the outcome (such as the existence of a substitute product) remain constant, prices will increase in this situation. Contrasts with "mutatis mutandis".

VIDEO

RELATED TERMS
  1. Law Of Supply

    A microeconomic law stating that, all other factors being equal, ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being ...
  3. Demand

    An economic principle that describes a consumer's desire and ...
  4. Supply

    A fundamental economic concept that describes the total amount ...
  5. Change In Demand

    A term used in economics to describe that there has been a change, ...
  6. Income Effect

    In the context of economic theory, the income effect is the change ...
Related Articles
  1. Economics Basics
    Economics

    Economics Basics

  2. Understanding Supply-Side Economics
    Economics

    Understanding Supply-Side Economics

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. What's the difference between macroeconomics ...
    Investing

    What's the difference between macroeconomics ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center