If the compensated (Hicks)and Marshall demand curves for a good intersect,at that point the Marshall curve will be:
A)flatter if this is a normal good.
B)steeper if this is a normal good.
C)flatter if this is an inferior good.
D)horizontal.

Question

Quizplus · Accepted Answer

If the compensated (Hicks) and Marshall demand curves for a good intersect, the Marshall curve will be flatter if this is a normal good. This is because the Hicks curve takes into account the income effect, while the Marshall curve does not. When the two curves intersect, the income effect is zero, and the Marshall curve represents only the substitution effect, which is why it is flatter than the Hicks curve. If the good is an inferior good, the Marshall curve would be steeper at the point of intersection.

If the Compensated (Hicks)and Marshall Demand Curves for a Good