The Latin term “ceteris paribus” means:
other things equal.
that if event A precedes event B, ?A has caused B.
prosperity inevitably follows recession.
that economics deals with facts, not values.
The Correct Answer and Explanation is :
The correct answer is:
other things equal.
Explanation:
The Latin term ceteris paribus is widely used in economics, philosophy, and other social sciences. It translates to “all other things being equal” or “holding other things constant.” This term is used to isolate the effect of one variable by assuming that all other variables remain unchanged.
In economics, the concept of ceteris paribus is crucial because it allows analysts to simplify complex relationships and focus on the cause-and-effect dynamics of specific variables. For example, when studying the law of demand, which states that an increase in price leads to a decrease in quantity demanded (and vice versa), ceteris paribus is assumed. This means the relationship holds true as long as other factors, such as consumer income, preferences, or the prices of substitute goods, remain constant.
Without the ceteris paribus assumption, analyzing economic behavior would be nearly impossible because real-world phenomena are influenced by countless interdependent factors. By holding certain variables constant, economists can create models to predict outcomes, test theories, and analyze policy impacts.
However, it’s important to recognize the limitations of this assumption. Real-world scenarios rarely allow all other factors to remain constant. Therefore, conclusions drawn under ceteris paribus often require further testing and adjustments when applied to dynamic environments.
In summary, ceteris paribus is a foundational tool that simplifies analysis by assuming all other variables remain unchanged, allowing economists to focus on the relationship between specific factors. Despite its utility, understanding its limitations is crucial when interpreting results and applying them to complex, real-world situations.