2.9 CETERIS PARIBUS

• Ceteris Paribus: This principle assumes that all other variables remain constant except the one being examined, helping isolate cause-and-effect relationships in models.
• 'Other things equal' (ceteris paribus) is an assumption often used in economics to isolate the effect of one variable by holding other variables constant.
• Cause and Effect Relationships: In economics, we often seek to determine how changes in one variable (X) affect another variable (Y). The 'other things equal' assumption allows economists to focus on the relationship between X and Y without the interference of other variables.
• While 'other things equal' simplifies analysis by focusing on one variable at a time, real-world situations often involve multiple factors changing simultaneously. Therefore, the assumption is used to make complex relationships more manageable for analysis.