3.1 Slutsky's equation relates the Marshallian demand function to the Hicksian demand func- tion, and therefore provides a way in which to decompose the total effect of a price change on quantity demanded into the substitution and income effects. Provide an expression for the general Slutsky equation of a good (x;) with respect to changes in the price of xi, and clearly label the total effect, substitution effect and income effect.

3.1 Slutsky's equation relates the Marshallian demand function to the Hicksian demand func- tion, and therefore provides a way in which to decompose the total effect of a price change on quantity demanded into the substitution and income effects. Provide an expression for the general Slutsky equation of a good (x;) with respect to changes in the price of xi, and clearly label the total effect, substitution effect and income effect.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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