Economics
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Question from Past Microeconomics Qualifying Exam[]

Spring 2001 - Section I, Question Six, George Mason University

State first whether the following statements are true, false, or uncertain. Then briefly explain your reasoning in four or five sentences. You may use a graph if it helps clarify your answer.

An income-compensated demand curve is everywhere more elastic than an ordinary demand curve.

Answer[]

Because the income effect is removed, the income-compensated (Hicksian) demand curve is less elastic than the ordinary (Marshallian) demand curve

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