Ceteris Paribus Assumption

Ceteris paribus or caeteris paribus is a Latin phrase, literally translated as "with other things the same," or "all other things being equal or held constant.". In economics, the ceteris paribus assumption states that he demand curve is fixed in the price quantity space on the assumption that all other factors which may influence the demand eg, the consumers income, advertising, the pricing of alternatives remain constant.

A shift in the demand curve from D0 to D1 represents an increase in demand, while a movement from D0 to D2 is associated with a reduction in demand. Note that a shift in demand from D0 to D1 results in more of the product being demanded at each and every price, for example at a price of 30p per unit quantity demanded increases from 5 to 6 units.