ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The assumption behind a demand curve or a supply curve is that no relevant economic factors, other than the product’s price, are changing. Economists call this assumption ceteris paribus, a Latin phrase meaning “other things being equal”.

Detailed explanation-2: -The ceteris paribus assumption will affect a demand curve because it will look at elasticity. If there’s an increase in the price of a good and all other factors stay constant, then the demand for that good will decrease. This is because most people won’t be able or willing to make purchases above their budget levels.

Detailed explanation-3: -The ceteris paribus assumption is a Latin phrase that means “other things being equal.” It is used in economics to refer to the assumption that all other factors are held constant in order to isolate the effect of a single variable on an economic outcome.

Detailed explanation-4: -What is Ceteris Paribus. Definition: This commonly-used phrase stands for ‘all other things being unchanged or constant’. It is used in economics to rule out the possibility of ‘other’ factors changing, i.e. the specific causal relation between two variables is focused.

Detailed explanation-5: -One example of ceteris paribus would be the economic law of supply. According to this law, an increase in price results in an increase in quantity supplied, when keeping others factors constant or ceteris paribus.