-Refer to Exhibit 4-4. Which curve represents the compensated demand function?
A) (a)
B) (b)
C) There is not enough information to give an answer.

Question

-Refer to Exhibit 4-4. Which curve represents the compensated demand function?
A) (a) 
B) (b) 
C) There is not enough information to give an answer.

Quizplus · Accepted Answer

The compensated demand function is the demand function that holds the consumer's utility constant. In Exhibit 4-4, the compensated demand function is represented by curve (a) because it shows the quantity of the good that the consumer will demand at each price, holding utility constant.