Ceteris Paribus - all other things being equal
In economics we make the assumption that all ‘other things being equal’, then xxxxx will happen. This
is known as Ceteris Paribus. An example of this is if price decreases, then demand will increase.
In economics, there are too many variables to be able to carry out a controlled ‘scienti c’ experiment.
Factors such as interest rates, tax rates, unemployment and consumer spending habits cannot be
controlled.
Short-run:
◦At least one factor of production is xed
Long-run:
◦No factors of production are xed
In economics we make the assumption that all ‘other things being equal’, then xxxxx will happen. This
is known as Ceteris Paribus. An example of this is if price decreases, then demand will increase.
In economics, there are too many variables to be able to carry out a controlled ‘scienti c’ experiment.
Factors such as interest rates, tax rates, unemployment and consumer spending habits cannot be
controlled.
Short-run:
◦At least one factor of production is xed
Long-run:
◦No factors of production are xed
