ECON 100A Lecture Notes - Lecture 21: Hicksian Demand Function, Substitute Good, Indifference Curve

117 views2 pages
Published on 17 Nov 2016
School
Department
Course
ECON 100A
Utility function for which marshallian and hicksian demand are the same?
- marshallian demand: move from e1 to e3 (total effect)
- hicksian demand: move from e1 to e2 (substitution effect)
- since marshallian and hicksian has to be the same, income effect has to = 0
- Perfect complements
o
o substitution effect = 0
o cannot substitute between one or another since the two has to be
consumed in ratio
o income effect e2 to e3
- perfect substitutes
o case 1
red: indifference curve
marshallian demand is not responsive to change in price
total effect = 0
substitution effect = 0
income effect = 0
o case 2
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Grade+

Unlimited access to all notes and study guides.

YearlyMost Popular
75% OFF
$9.98/m
Monthly
$39.98/m
Single doc
$39.98

or

You will be charged $119.76 upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.