ECON 3710 Study Guide - Midterm Guide: Joe Sakic, Marshallian Demand Function, Hicksian Demand Function
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This exam constitutes 30% of your final mark: two econ 3710 students, matt sundin and joe sakic, made the following statements about marshallian and hicksian demand curves: Matt sundin: the marshallian demand curve is steeper than the hicksian demand curve . Joe sakic: the hicksian demand curve is steeper than the marshallian demand curve . Using the slutsky equation, how would you reconcile these two seemingly contradictory statements. Please explain your answer: in question (4) of assignment 1, we considered the nation of san serrife which had the option of joining the european union. A representative consumer of this nation had the utility function u = x y1- . , where x was the consumption of milk and y was the consumption of wine, and 0 < < 1. Joining the union meant that the price of milk would jump to 4 times its pre-entry level but the price of wine would fall by 50%.
