Suppose that we can represent Joyce's preferences for cans of pop (the x-good) and pizza slices (y-good) with the utility function min[4x,5y]. a) Find her Marshallian Demand Functions. b) Find her Hicksian Demand Functions
Suppose that we can represent Joyce's preferences for cans of pop (the x-good) and pizza slices (y-good) with the utility function min[4x,5y].
- a) Find her Marshallian
Demand Functions. - b) Find her Hicksian Demand Functions
The given utility function, U = min[4x,5y], which shows that both goods are complementary. Complementary goods are those that are demanded together, and the indifference curves are L-shaped.
The Marshallian demand function is the demand function of a given good that is expressed in terms of consumers' income (say, M), the own price of the good (say Px), and the price of the other good (say Py).
The Hicksian demand function is the demand function of a given good solved from the expenditure minimization problem. It is the demand function calculated after expenditure on each of the goods is minimized and is the function of the indirect utility function.
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