In section 14.2.2 we showed that for consumer surplus to be a unique, money-metric measure of utility

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In section 14.2.2 we showed that for consumer surplus to be a unique, money-metric measure of utility change for price increases or decreases, the marginal utility of income must be constant with respect to the prices that change. We saw that this implies the income elasticities of demand for goods whose price change must be equal.
Use the Slutsky equation relationship for any two goods j and k whose prices change in the analysis to show that a constant marginal utility of income also implies equality of the ordinary demand cross price effects.

Data from section 14.2.2

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A Course In Environmental Economics

ISBN: 9781316866818

1st Edition

Authors: Daniel J Phaneuf, Till Requate

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