{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

marshalliandemandslides

marshalliandemandslides - Marshallian Demand Marshallian...

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Marshallian Demand
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Marshallian Demand: Relating P 1 and X 1 x 1 x 2 x 1 p 1 U 1 x 2 1 x 1 1 x 1 1 Y/p 1 1 Y/p 2 p 1 1 Suppose P 1 increases … x 1 2 Y/p 1 2 U 2 x 2 2 p 1 2 x 1 2 d 1 0 0 0 : FOC ) ( ) , ( max 2 2 1 1 2 2 2 1 1 1 2 2 1 1 2 1 } , , { 2 1 = - - = = - = = - = - - + = x P x P Y P x U x P x U x x P x P Y x x U x x λ λ λ λ λ L L L L 2 2 1 * 2 1 2 1 * 1 ) , , ( ) , , ( d Y p p x d Y p p x = = utility increases as move downward along demand at every point on the demand curve the consumer is maximizing utility demand equation derives from FOC of constrained utility maximization Price- consumption path
Image of page 2
Income Changes: Engel Curve vs. Shifting Demand Curve x 1 x 2 x 1 p 1 U 1 x 1 0 x 1 0 Y 0 /p 1 Y 0 /p 2 p 1 x 1 ' x 1 ' d 1 0 x 2 0 Y'/p 1 x 2 ' x 1 x 2 U 1 x 1 ' Y'/p 1 x 2 ' Income- consumption path U 2 U 2 Y'/p 2 Suppose income falls … Y'/p 2 x 1 x 1 0 x 1 ' Y Y 0 Y' Engel’s Curve Y 0 /p 1 x 1 0 Y 0 /p 2 x 2 0 d 1 ' Demand Curve
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Normal and Inferior Goods x 1 x 2 U 2 X 1 Y’/p 1 Y /p 2 x 1 0
Image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern