Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Derivation of compensated demand curve:
Hicksian compensated demand function for x1 is given by x1=x1(p1, p2, U), where Hicksian compensated demand curve for a good represent the relationship between price of that good with its own demand quantity for given prices of other goods and real income in terms of utility.
We now derive this graphically. Suppose, initial equilibrium is attained at e0 in Figure A where price of good on is p10 and price of good two is p20 respectively and utility is fixed at U0. Corresponding indifference curve is IC0. Compensated Hicksian demand for x1 is at x10. Expenditure line is AB at initial equilibrium with absolute slope p10/p20. Plot this x10 and p10 in Figure B. Suppose, for given utility and p2, p1 decreases to p11. Therefore, absolute slope of the budget line decreases, i.e., expenditure line become flatter. Since utility is constant, the indifference curve remains the same as before. Therefore, expenditure is minimised for given utility at point e1 in Figure A, as indifference curve is downward sloping strictly convex to the origin. So compensated Hicksian demand for good I increases to x11 plot p11 and x11 in Figure B. By joining all such pair of p1 and x1 in Figure B, we have a downward sloping curve in p1-x1 plane, for given p2 and utility. This downward sloping demand curve is the Hicksian compensated demand curve. This is shown in the above Figure B.
Conditionality: International financial institutions (such as World Bank andInternational Monetary Fund) usually attach strong conditions to emergency loans they make to developing
User Cost of Capital = Economic Depreciation + (Interest Rate)(Value of Capital) - Example An Airline buys Boeing 737 for $150 million with the expected life of 30
REAL BUSINESS CYCLES: The extent of this module is partly indicated in the title. It is about real business cycle (RBC) theory. In addition, it exposes you to New Classical Bu
Consumer Behavior: The government considers different calculations to help senior citizens with their increasing heating bills. One proposal on the table is to pay 20% of senio
project work
Problem: i) What might be the possible causes of inflation according to economic theory? ii) Taking stable prices and full employment as two macroeconomic objectives of gov
Q. Explain about Natural Monopoly? Natural Monopoly: In some industries, economies of scale are so strong that it makes most economic sense for there to be just one supplier. T
1) The Economy cannot be considered fully employed unless the measured unemployment rate is below 1%. Agree or disagree and explain your answer in a paragraph. 2) A) Why would y
(a) Suppose Scientists discover that eating soybeans prevents cancer and heart disease.
differentiate between normative and positive statements in economics with the help of a statement
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd