Hicksian Demand refers to the quantity of goods that a consumer would buy to minimize their expenditure while achieving a specific level of utility, given changes in prices. This concept is based on the work of economist John Hicks and is a key part of consumer theory in microeconomics. Unlike Marshallian demand, which focuses on the relationship between price and quantity demanded, Hicksian demand isolates the effect of price changes by holding utility constant.
Mathematically, Hicksian demand can be represented as:
where is the Hicksian demand function, is the price vector, and represents utility. This approach allows economists to analyze how consumer behavior adjusts to price changes without the influence of income effects, highlighting the substitution effect of price changes more clearly.
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