Search results
Results from the WOW.Com Content Network
The Hicksian demand function isolates the substitution effect by supposing the consumer is compensated with exactly enough extra income after the price rise to purchase some bundle on the same indifference curve. [2] If the Hicksian demand function is steeper than the Marshallian demand, the good is a normal good; otherwise, the good is inferior.
It is also possible that the Hicksian and Marshallian demands are not unique (i.e. there is more than one commodity bundle that satisfies the expenditure minimization problem); then the demand is a correspondence, and not a function. This does not happen, and the demands are functions, under the assumption of local nonsatiation.
where (,) is the Hicksian demand for good , (,) is the expenditure function, and both functions are in terms of prices (a vector) and utility . Likewise, in the theory of the firm , the lemma gives a similar formulation for the conditional factor demand for each input factor: the derivative of the cost function c ( w , y ) {\displaystyle c ...
A Cobb-Douglas utility function (see Cobb-Douglas production function) with two goods and income generates Marshallian demand for goods 1 and 2 of = / and = /. Rearrange the Slutsky equation to put the Hicksian derivative on the left-hand-side yields the substitution effect:
Roy's identity is akin to the result that the price derivatives of the expenditure function give the Hicksian demand functions. The additional step of dividing by the wealth derivative of the indirect utility function in Roy's identity is necessary since the indirect utility function, unlike the expenditure function, has an ordinal ...
Hicks decomposition, Hicksian decomposition, Hicksian decomposition of demand-> concept in economics. See Slutsky equation and Hicksian demand function; Gains from production, Gains from specialization-> This is the term for the benefits that occur due to the shift in supply after trade takes place
Download as PDF; Printable version; From Wikipedia, the free encyclopedia. Redirect page. Redirect to: Hicksian demand function; Retrieved from " ...
Finding (,) is the utility maximization problem. If u is continuous and no commodities are free of charge, then (,) exists, [4] but it is not necessarily unique. If the preferences of the consumer are complete, transitive and strictly convex then the demand of the consumer contains a unique maximiser for all values of the price and wealth ...