What are the differences between compensated and uncompensated demand curves?

Economics Dec 12, 2020

Expert Solution

The compensated demand curve, also known as the Hicksian demand curve shows the changes in demand as a result of prices changing while holding utility constant.

Uncompensated demand curve is also referred to as the Marshallian it represents how demand changes when price changes in a situation where money income is constant.

The uncompensated demand curve is usually stable since they show the effect of both rent and substitution while compensated demand only shows the substitution effect.

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