Consumers choice: Demand

7 important questions on Consumers choice: Demand

What is the Marshallian Demand curve?

Comes straight from utility maximization

What is the substitution effect?

Change in a consumers consumption choices that result from a change in the relative prices of 2 goods

is always negative

What is Giffen's paradox?

Inferior good but IE>SE,
Does Giffen good actually exist?
  • Higher grades + faster learning
  • Never study anything twice
  • 100% sure, 100% understanding
Discover Study Smart

What are the 2 approaches of compensated demand curve?

1. Holding I and Py constant (Marshallian or uncompensated demand curve)

2. Holding U and Py constant (Hicksian or compensated deman curve)

What is an uncompensated demand curve?

Marshallian demand curve

U goes up if Px goes down
responses to change in P includes SE's and IE's

What is Shepperd's lemma

Dual expenditure minimization problem ( expenditure function is defined out of the lagrange)

What is the enveloppe theorem?

dE(Px,Py,U)/dPx = dL/dPx = xç(Px,Py,U)

one of the major applications of the implicit function theorem

The question on the page originate from the summary of the following study material:

  • A unique study and practice tool
  • Never study anything twice again
  • Get the grades you hope for
  • 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
Trustpilot Logo