What is the meaning of ceteris paribus in economic terms?

Ceteris paribus is a Latin phrase that translates to "all other things being equal" or "all other variables being constant." In economic analysis, this concept is used to isolate the effect of one variable by assuming that other influencing factors remain unchanged. This allows economists to focus on the relationship between specific variables, such as the price of a good and the quantity demanded, without the complexity of many other shifting variables affecting the outcome.

By utilizing the assumption of ceteris paribus, economists can create more straightforward models and theories to examine how changes in one aspect of the economy may influence other parts. This is essential for understanding basic economic principles, which often rely on the simplification of complex real-world interactions. Consequently, the focus solely on the variable of interest, while holding others constant, provides clarity and helps in drawing conclusions about economic behavior and decisions.