Question

If a good is normal, will the Marshallian or Hicksian demand curve be steeper? Explain.

If a good is normal, will the Marshallian or Hicksian demand curve be steeper? Explain.

Homework Answers

Answer #1

Marshallian demand curve show the relationship between the price of good and the quantity demanded of it while hicksian demand curve show the relationship between the price of good and the quantity demanded of it assuming that the price of other goods and level of utility remain same .

The hicksian demand curve is steeper then the marshallian demand because the hicksian demand only accounts for SUBSTITUTION effect while the marshallian demand focuses on income and substitution effect

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