Unit |
ECC5650 |
Topics |
Slutsky Equation, Shepherd's Lemma, Elasticities |
A useful identity, Shephard's Lemma
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Provide a proof for the Slutsky Equation,
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recalling that,
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.Graphically illustrate and explain the resulting change in
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for a given change inlatex error! exitcode was 2 (signal 0), transscript follows:
by appealing to the components of the Slutsky Equation.Given that the following elasticity relations hold for the Marshallian Demand Functions,
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show that:Engel aggregation is given by:
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Cournot aggregation is given by:
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(Hint: make use of Walras' Law,
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.)