Contract Curve: Pareto Efficient Allocations
contract curve analysis derives Pareto-efficient allocations in an Edgeworth box by equating two agents’ marginal rates of substitution at tangency...
Consumer Theory
Giffen Goods: When Demand Curves Slope Upward
Giffen goods are inferior staples whose demand rises with price because the income effect overwhelms substitution. Jensen and Miller's 2008...
Marginal Rate of Substitution: Slope, Concavity, and Choice
The marginal rate of substitution is the slope of the indifference curve at a point and the ratio of marginal...
Hicksian vs Marshallian Demand: Two Curves, One Consumer
Hicksian vs Marshallian demand is the central duality of consumer theory. One holds income constant for empirical work; the other...
Engel Curve: How Spending Patterns Shift with Income
The engel curve traces how spending patterns shift with income, showing that food budget shares fall systematically as households grow...
Slutsky Equation: Decomposing Price Effects into Income and Substitution Effects
The Slutsky equation decomposes any price change into substitution and income effects, providing the analytical foundation for tax policy, inflation...