We have described in section 4.4 the causes of shocks. We now need to consider changes to the utility and demand functions. There are four basic shocks to the utility and inverse demand (i.e., price on the vertical axis and demand on the horizontal) functions;
Upward arithmetic (parallel shifts)
Upward geometric (parallel shifts of the logarithm)
KeywordsRisk Aversion Inequality Aversion Absolute Risk Aversion Theil Index Technical Appendix
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- 5.Pareto (1897), Cours d’Economie Politique (Paris, France: Librairie De l’Université Lausanne), noted the fit to his distribution.Google Scholar
© Chris Harris 2015