def. Expenditure Function. (Income Function) Relates prices and a certain utility to the required income to achieve that level of utility.

Derivation. Substitute Hicksian Demand functions into the Budget Constraint.


  • HD1 in prices ()
  • Increasing in prices ()
    • equal when you’re not buying that good.
    • Higher prices require more income
  • Increasing in utility ()
    • More utility requires more expenditure.
  • Use Shepard’s Lemma in order to get back to Hicksian Demand Curve