An important concept in the real world of economics - Ceteris Paribus
Ceteris Paribus is a latin term which means "all other things remains constant" .Let us take Law Of Demand in consideration which states, Ceteris paribus, price of any goods and services and quantity demand of any goods and services are inversely related to each other i.e. When the price of a commodity increases the demand decrease and when the price of the commodity decreases it's demand increases.
Now here we use "Ceteris Paribus" as in the real world there comes many variables that might effect the outcome that economists study. It is helpful when study regarding relative tendencies in a particular market is observed.
In Law Of Demand, we assume other things remain constant and only price factor is considered. These other things or ceteris paribus in case demand are :
* Taste and Preference of the customer remains same.
* Income of the customer remains same.
* No change in price of the commodity in future.
* No changes in price of related commodity.
* Population's size and composition remains same.
Thus ceteris paribus in Law Of Demand is used by economist to produce a much more accurate result regarding Demand for commodity.
Ceteris Paribus is a latin term which means "all other things remains constant" .Let us take Law Of Demand in consideration which states, Ceteris paribus, price of any goods and services and quantity demand of any goods and services are inversely related to each other i.e. When the price of a commodity increases the demand decrease and when the price of the commodity decreases it's demand increases.
Now here we use "Ceteris Paribus" as in the real world there comes many variables that might effect the outcome that economists study. It is helpful when study regarding relative tendencies in a particular market is observed.
In Law Of Demand, we assume other things remain constant and only price factor is considered. These other things or ceteris paribus in case demand are :
* Taste and Preference of the customer remains same.
* Income of the customer remains same.
* No change in price of the commodity in future.
* No changes in price of related commodity.
* Population's size and composition remains same.
Thus ceteris paribus in Law Of Demand is used by economist to produce a much more accurate result regarding Demand for commodity.
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