Deriving Marshallian and Hicksian Demand Functions (Compensated and Uncompensated Demand)

Deriving Marshallian and Hicksian Demand (Compensated and Uncompensated Demand)

Consider the utility function U(x,y)=xy subject to an Income constraint; M=px+py

Find the Marshallian and Hicksian Demand Functions for good x and good y .

These two types of demand functions compliment each other. Hicksian Demand concerns minimising the costs associated with attaining a particular level of utility, Marshallian Demand concerns maximising utility for a given level of income.

Economics Playlist



Derivation of Hicksian Demand Functions from Utility Functions:

Deriving Marshallian and Hicksian Demand Functions (compensated and uncompensated demand):

Derivation of a Generalised (n-good) Marshallian Demand Function from Utility Function.

Deriving Hicksian (compensated) Demand Using the Slutsky Equation:

Deriving Marshallian Demand From a Stone-Geary Utility Function:

I hope it helps :)

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[HaroldWalden]

Had a few positive comments on these compensated and uncompensated demand derivations using the method of Lagrange. Fairly important that you know how to do this stuff if you want to continue towards a career in microeconomic modelling.

[rensverbeek]

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