Frisch demands are demand equations found usually in an intermediate step of the standard utility maximization problem. By example for the basic two-good case of a consumer with quasilinear preferences: $$U(x,y)=y+\ln (x)$$

the corresponding Frisch Demand is:

$$x^f(\lambda,\text{p})=\frac{1}{1+\lambda p_x}$$

In general what are Frish demands useful for on their own? What Questions do they answer?

  • $\begingroup$ I have not heard of Frisch demand before, and fail to understand how it is calculated from your example. (What is $\lambda$?) Could you please explain how it is calculated or refer to an explanation? $\endgroup$ – Giskard Feb 21 '20 at 6:15
  • $\begingroup$ @Giskard its a a quantity determined by prices and the marginal utility from money $\lambda$, this is from your standard utility maxization problem. From what I understand this $\lambda$ term embodies a the complecated allocation process each dollar that enters our consumer's hand goes through. $\endgroup$ – EconJohn Feb 21 '20 at 6:23

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