The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Compensated Demand

  • Tatsuo Hatta
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_242

Abstract

When a consumer faces a price change under a given nominal income, his utility (or real income) level as well as his demand vector changes. Suppose, however, that his income level is simultaneously changed as the price is changed so as to keep his utility at the initial level. This operation may be regarded as a compensation for the price change, and we call the resulting demand vector the compensated demand for the new price.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Tatsuo Hatta
    • 1
  1. 1.