The primary difference between compensated and uncompensated demand functions is the presence or absence of the income effect that results from price changes.

Question

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Compensated demand takes into account the income effect by adjusting for changes in income resulting from price changes, while uncompensated demand does not account for this effect. Therefore, the presence or absence of the income effect is the primary difference between the two types of demand functions.

The Primary Difference Between Compensated and Uncompensated Demand Functions Is