(a) Write the own price Slutsky equation in derivative form (b) Use this to evaluate the...

(a) Write the own price Slutsky equation in derivative form

(b) Use this to evaluate the following statement: “If an increase in income has no effect on demand for a good, then the demand function can have either a positive or negative slope.”

(c) Use the equation from (a) again to derive the elasticity form of the Slutsky equation. Hint: The elasticity form of the Slutsky equation should include the following elasticities: εM x,px , the Marshallian own-price elasticity for good x, ε H x,px , the Hicksian own-price elasticity for good x, and ηx, the income elasticity for good x

Expert Solution

According to the question below given image contains own price slusky equation in derivation form and the evaluation on mentioned statement.

Rahul Sunny answered 3 years ago

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