Skip to main content

# Questions tagged [slutsky-equation]

The tag has no usage guidance.

28 questions
Filter by
Sorted by
Tagged with
4 votes
1 answer
122 views

0 votes
1 answer
611 views

### Calculate income and sustitution effect from utility funcion

Utility function $U(x_1 , x_2) = x_1 + 4 * x_2$ $p_1 = 3, p_2 = 8, m =120$ $p_2$ changes from $8$ to $10$ How can I calculate the income and substitution effect. I first thought about calculating ...
0 votes
1 answer
48 views

### Confusion regarding the Slutsky equation

I'm reading Henderson and Quandt's Microeconomic Theory textbook and in the derivation process of the slutsky equation the final formula confused me a bit. The first term on the right of the equation ...
0 votes
0 answers
98 views

### substitution effect in slutsky equation

We know Slutsky equation decomposes the price effect into substitution effect and income effect, where the substitution effect is the partial derivative of Hicksian demand function against the change ...
• 113
-1 votes
1 answer
2k views

### 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: $x,y >> 0$....
-1 votes
2 answers
214 views

### How to derive substitution and income effect using Slutsky equation if we don't know which of the prices change?

We have the utility function $$U(x,y)=x + y$$ and we have to derive the substitution and income effects using Slutsky equation. But after I derive the Hicksian demand functions for e.g. x: h_x= \...
• 41