Other Things Being Equal


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Other Things Being Equal

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That's not the case in economics. Everything is always changing. That makes it harder to create economic laws than physical laws. You can focus on how a change in the independent variable affects the dependent variable. Here's how an economist might use ceteris paribus to explain the law of demand.


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  • In other words, when people want less of a good or service, then sellers will lower the prices. Or they could update the product to stimulate demand.


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    Sometimes manufacturers can't lower the price because their costs are too high. In that case, they'll accept a lower volume. In the real world, all other things are never equal. But using the concept of ceteris paribus allows you to understand the theoretical relationship between cause and effect.

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    The economic law of demand is like the physical law of gravity. Will there be infinite bandwidth, perhaps? All other things being equal, everything should work. Will all other things remain equal?

    Why is the assumption of ceteris paribus important in determining causation?

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    Translations of “all things being equal”

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