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When does ceteris paribusapply?
We typically apply ceteris paribuswhen we observe how changes in price affect demand or supply, but we can apply

ceteris paribusmore generally. In the real world, demand and supply depend on more factors than just price. For

example, a consumer’s demand depends on income and a producer’s supply depends on the cost of producing the

product. How can we analyze the effect on demand or supply if multiple factors are changing at the same time—say

price rises and income falls? The answer is that we examine the changes one at a time, assuming the other factors

are held constant.

For example, we can say that an increase in the price reduces the amount consumers will buy (assuming income,

and anything else that affects demand, is unchanged). Additionally, a decrease in income reduces the amount

consumers can afford to buy (assuming price, and anything else that affects demand, is unchanged). This is what the
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