Deriving Marshallian and Hicksian Demand Functions (Compensated and Uncompensated Demand)

Deriving Marshallian and Hicksian Demand (Compensated and Uncompensated Demand)
Consider the utility function U(x,y)=xy subject to an Income constraint; M=px+py
Find the Marshallian and Hicksian Demand Functions for good x and good y .
These two types of demand functions compliment each other. Hicksian Demand concerns minimising the costs associated with attaining a particular level of utility, Marshallian Demand concerns maximising utility for a given level of income.
Economics Playlist
Derivation of Marshallian Demand Functions from Utility Functions: • Derivation of Marshall...
Derivation of Marshallian Demand Functions from Utility Functions (II): • Derivation of Marshall...
Derivation of Hicksian Demand Functions from Utility Functions:
• Derivation of Hicksian...
Deriving Marshallian and Hicksian Demand Functions (compensated and uncompensated demand):
• Deriving Marshallian a...
Derivation of a Generalised (n-good) Marshallian Demand Function from Utility Function.
• Derivation of a Genera...
Deriving Hicksian (compensated) Demand Using the Slutsky Equation:
• Deriving Hicksian (com...
Deriving Marshallian Demand From a Stone-Geary Utility Function:
• Deriving Marshallian D...
I hope it helps :)

[@bruno2011gmail]

I've learned more on this subject with this video than in an entire semester at college. You rock!

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Glad I could help mate! Maybe you should show your lecturer my content. Just to give him another method for describing the concepts.
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That’s really nice to hear, thanks mate.
I have been trying to make more videos but work and moving house has gotten in the way recently.
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Video came out 6 years ago and still helping me in Econ 300 today! Thank you so much Harold!

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It’s amazing how these videos continue to help people. I am so glad I put the effort into making them all those years ago.
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Loved it... It still baffles me how I couldn't derive these functions before. Thank u so much. Easy explanation, easy calculations. God bless you!

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Thanks for the positive feedback, I really appreciate it :)

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Perfectly explained, thanks!

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Glad I could still be of use

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The best explanation on the subject I've seen.

[@HaroldWalden]

Thanks for that man, I appreciate the positive feedback, if you have any ideas for future videos, don’t hesitate to let me know.
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[@HaroldWalden]

Thank you for the positive feedback, I really appreciate it.
If you want my opinion, @3blue1brown is the Tom Brady of mathematics-related content on UA-cam.

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Great! Clearest video about this topic on YT !

[@HaroldWalden]

Thanks man! I really appreciate it! if you need any other topics explained and you like the way I do it let me know, I am always looking for new video ideas :)

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Thanks man, it is really nice to get positive feedback. Just got to keep on keeping on. Do us s favour and tell your mates about me. That would be fantastic :)

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Thank you so very much for simplifying this.

[@HaroldWalden]

So glad I could help.

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THANK YOU VERY VERY MUCH

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This was perfect Thank You!

[@HaroldWalden]

Glad you liked it :)

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[@HaroldWalden]

No worries, I am glad the video helped 🤓
Thanks for taking the time to leave a positive comment. I really appreciate it :)

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[@HaroldWalden]

Thanks for the nice words, I really appreciate it.
If you’re having trouble with any of these topics, just let me know. I am always looking for new video ideas.
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[@HaroldWalden]

@@arefemamian Again, that's very kind of you. But just so you know, if you are having difficulty with any specific problems, let me know and I would be more than happy to try and put a video together on it.
Until that time, keep enjoying your economics :)

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[@HaroldWalden]

You’re welcome, thanks for taking the time to leave positive feedback :)

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[@HaroldWalden]

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Very well explained

[@HaroldWalden]

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thank you sir. very helpful

[@gbplegendfx]

Thank you

[@HaroldWalden]

Had a few positive comments on these compensated and uncompensated demand derivations using the method of Lagrange. Fairly important that you know how to do this stuff if you want to continue towards a career in microeconomic modelling.

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Thanks man! Always good to get positive feedback :)

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[@huseyinalupveren3768]

Harold you are probably contributed my knowledge on economics more than my professor. Really appreciate. but i have a question: i lost my second good(y) in first order cond. process so i only can find the x and not the y. what should i do if i lost one of my goods in lagrange process?

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thanks, I appreciate the support :)

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Thanks

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Cheers, really glad you enjoyed it :)

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Capitol
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Thank you!

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Thanks

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Is there a difference between them when deriving perfect substitutes?

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Thank you so much !🙂🤗...

[@HaroldWalden]

No problem, glad the video helped 🤓

[@nourkarim2721]

Hi, thank you so much!! your videos are really beneficial. Can you please make a video on compensating variation and equivalent variation. and how we calculate them.

[@HaroldWalden]

That’s a good idea, when I get a moment, I’ll put one together and give you a like if you like.
🤓

[@nourkarim2721]

@@HaroldWalden yes that will be great

[@hehehe9618]

What if the utility function = x^2+y^2? The answer would be the same since the constants will be cancelled out?

[@HaroldWalden]

Check out this video I did, I feel like it may help answer your question.
ua-cam.com/video/o9cKLSkAF0s/v-deo.html
Let me know if you need any more help :)

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Educative

[@HaroldWalden]

Glad I could be of assistance. Thanks for watching :)

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Sir I am a bigener ,why Lagrangian function is used in such cases?

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plz upload some videos on numerical problems on CV and EV,on S.E. and I.E.,thank you

[@HaroldWalden]

If you can be more specific that would really help :)

[@HaroldWalden]

@tapaswini mishra I would love to but I have no idea what your referring to with those acronyms 😢

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I think the first two stand for compensated variation and equivalent variation

[@HaroldWalden]

Thanks I’ll have a look and see what I can do!

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[@HaroldWalden]

No problems 🤓

[@devangeib7864]

Hey Harold, Great video! Quick question: after you do the partials for each demand function, we get to y= and x=. What are x and y telling us? You mentioned something about MRS... is that the equation for MRS for good x? And once the x and y are optimized (with *) those are our demand functions for those goods right? Lastly, where does the lagrange multiplier come into play? We use it to set these up but it doesnt come up again? What does lambda tell us in these problems? Thanks so much!

[@bruno2011gmail]

Well, I can answer the MRS stuff: basically, solving this problem through Lagrange is one way to look at it. The other one is MRS=Px/Py (keep in mind that MRS is equal to marginal utility of X/marginal utility of Y, meaning you derive partially with respect to X and Y, and take MUx/MUy = Px/Py), and taking the results of this process and applying them to the budget constraint will give us the Marshallian demand for good X or Y, depending on which one you isolate. That is why he got to the MRS equation for good X in the middle of the process.
I have never tried the MRS process with the Hicksian demand, so I'm not sure if it works or if you can only solve it through Lagrange.
As to the Lagrange multiplier, It sure has an economic meaning, which I still do not know :/
Anyway, I know it's been 11 months, but maybe this might help.

[@sundayagbonjinmi6773]

Thanks for this video. However, kindly assist with this below request
Marshallian and Hicksian derivative function is needed with (X1 and X2 with power)raise to power function is needed.

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شكرا

[@HaroldWalden]

مرحبا بك
:)

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I have an email address: [e-mail]

[@MrKamilof4]

great job!!!!!

[@NicoBlackstar]

Great video!
Could you please tell me for this two goods is gross substitute or gross complement? net substitute or net complement?

[@HaroldWalden]

Sorry it has taken a moment to respond, i have been crazy busy on my end.
Have a look at this explanation:
economics.stackexchange.com/questions/4579/gross-substitutes-vs-net-substitutes

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what happens if god 1 has a number lets say max u = 5x^1/2 how would you solve dl/dx??

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Thanks mate, there are not enough ways that I can like this comment. Just keep doing your own thing and don’t listen to anyone who tries to pigeonhole you - that probably the best advice I can give.
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Thanks, glad you liked it.

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I live in Australia.

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I think you’ll find I am from Australia mate. 🇦🇺