Consider a perfectly inelastic (Marshallian) demand curve for a good X. Does this good also have a vertical Hicksian demand curve?

  • $\begingroup$ Seems like a homework problem. What have you tried? Hint, for quasi-linear preferences, the non-linear good has perfectly inelastic Marshallian demand. Solve for the Hicksian demand function. Is it perfectly elastic? Also, can a good actually have globally perfectly inelastic preferences? $\endgroup$ – BKay Apr 29 '19 at 20:08
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    $\begingroup$ I have tried to draw it with quasilinear preferences. At an interior optimum, there is a negative hicksian substitution effect, which indicates that hicksian demand won't be perfectly inelastic. However, can it be that both income and substitution effects are zero? Further, if income and substitution effects are equal and opposite to each other (which will give a vertical Marshallian demand curve), is it still a normal good? $\endgroup$ – PGupta Apr 30 '19 at 9:10
  • $\begingroup$ What if demand is inelastic at a quantity of zero? That's one way to ensure no income effect from the price change. $\endgroup$ – BKay Apr 30 '19 at 14:18

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