1
$\begingroup$

Putting price on the vertical axis and quantity on the horizontal axis, is the Slutsky demand steeper or flatter than the Hicksian demand curve? If I calculate the Slutsky and Hicksian substitution effects for a normal good (Cobb-Douglas), I get Slutsky substitution effect greater than Hicksian substitution effect. Shouldn' t that mean that Hicksian demand is steeper than Slutsky? I have seen the opposite being drawn in some lecture notes.

enter image description here

$\endgroup$
1
  • $\begingroup$ Extent in elasticity doesn't matter in case of Normal Good. $\endgroup$
    – waleed
    Commented Dec 7, 2022 at 11:37

0

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Browse other questions tagged or ask your own question.