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Questions tagged [slutsky-equation]

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What are the impacts of a small increase of the wages on consumption, labor supply and production?

We have given the utility function $\displaystyle U(v(c)-k(l))$ where $\displaystyle u$ and $\displaystyle v$ are increasing and concave functions and $\displaystyle k$ is increasing and convex. ...
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Is the Hicksian demand curve steeper or flatter than Slutsky demand?

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 ...
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Income and substitution effect for perfect substitutes

I was recently asked about what the income and substitution effects are for perfect substitutes are. Given the rather peicewise nature of the demands for each good in a utility function considering ...
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Calculating income and substitution effects

Consider a simple quasi-linear utility function of the form $U(x,y)=x +ln(y)$. For this problem, assume that you have “enough” income, so that the optimal consumption bundle is where: $x,y >> 0$....
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Income effect $-\frac{\partial x_i}{\partial m} x_i$ or $\frac{\partial x_i}{\partial m}x_i$?

Recall that the slutsky equation is: $$\frac{\partial x_i}{\partial p_i}=\frac{\partial h_i}{\partial p_i}-\frac{\partial x_i}{\partial m}x_i$$ I know $\frac{\partial h_i}{\partial p_i}$ defined as ...