Types of Demand Curves (MicroEcon)

Demand Curves §

Demand is a relationship between prices, income, and quantity consumed.

$$\text{Exogenous}:(p_1,p_2,I)\leftrightarrow \text{Endogenous}:(x_1,x_2)$$

Properties relating these variables are:

• $x_1\leftrightarrow I$: Income Elasticity of Demand (YED)
• $x_1\leftrightarrow x_2$: Elasticity of Substitution (EoS)
• $p_1\leftrightarrow x_1$: Own-price Demand Curves…
  1. Uncompensated Demand curve
     • = Ordinary Demand Curve
     • = Marshalian Demand Curve
  2. Compensated Demand Curve
     • = Marginal Willingness to Pay Curve
     • = Hicksian Demand Curve
• $p_1\leftrightarrow x_2$: Cross-Price Demand Curve
  • $p_1\leftrightarrow x_2$: Cross Elasticity of Demand (XED)