Beyond the Ceteris Paribus Assumption: Modeling Demand and Supply Assuming Omnia Mobilis

FEA Working Paper No. 2007-16

17 Pages Posted: 4 Feb 2010

See all articles by Mario Arturo Ruiz Estrada

Mario Arturo Ruiz Estrada

University of Malaya (UM) - Faculty of Economics & Administration (FEA)

Su-Fei Yap

University of Malaya - FEA

Shyamala Nagaraj

University of Malaya (UM) - Faculty of Economics & Administration (FEA)

Multiple version iconThere are 2 versions of this paper

Date Written: January 31, 2007

Abstract

In this paper we are concerned with the application of multi-dimensional graphs (or Cartesian Spaces) in visualizing and modeling total change in a dependent variable in response to changes in any or all of the (many) independent variables affecting it. Previous literature has used the ceteris paribus assumption to investigate and visualize the effect of each independent variable and obtains total change as a cumulative effect of the parts. The multi-dimensional graph allows the visualization of the omnia mobilis (everything is moving) assumption and further provides an alterative to modeling total change in a dependent variable. The application of this approach to demand and supply is shown. The approach shows that quantity sold in the market is not necessarily equal to the quantity demanded and supplied once the effect of independent variables other than just price is taken into account. Quantity demanded and supplied are mostly in disequilibrium and the quantity sold is a joint function of all the independent variables that affect supply and demand.

Keywords: Ceteris paribus, omnia mobilis, demand and supply, multi-dimensional graphs

JEL Classification: B41

Suggested Citation

Ruiz Estrada, Mario Arturo and Yap, Su-Fei and Nagaraj, Shyamala, Beyond the Ceteris Paribus Assumption: Modeling Demand and Supply Assuming Omnia Mobilis (January 31, 2007). FEA Working Paper No. 2007-16. Available at SSRN: https://ssrn.com/abstract=1545590

Mario Arturo Ruiz Estrada (Contact Author)

University of Malaya (UM) - Faculty of Economics & Administration (FEA) ( email )

Kuala Lumpur, 50603
Malaysia
+60126850293 (Phone)

HOME PAGE: http://ssrc.um.edu.my/

Su-Fei Yap

University of Malaya - FEA ( email )

Kuala Lumpur, Wilayah Persekutuan 50603
University of Malaya (UM)
50603 Kuala Lumpur
Malaysia
60 17 342 0171 (Phone)

Shyamala Nagaraj

University of Malaya (UM) - Faculty of Economics & Administration (FEA) ( email )

Jalan Lembah Pantai
Kuala Lumpur, Wilayah Persekutuan 50603
Malaysia
+603 - 7967 3643 (Phone)

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