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6. Which of the following statements must be true given a two good economy? I. Hicksian demand function is homogenous of degree 0 in px
6. Which of the following statements must be true given a two good economy? I. Hicksian demand function is homogenous of degree 0 in px and py. II. Marshallian demand function is homogenous of degree 0 in px, py, and I. III. The Marshallian demand function is less negatively sloped than the Hicksian demand function for a normal good.
(a) I and III (b) I and II (correct) (c) II and III (d) I, II, and III
My question is why is the Hicksian demand function is homogenous of degree 0 in px and py?
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