Munich Personal RePEc Archive

Money flexibility, price elasticity, and elasticity of marginal utility of consumption

Malakhov, Sergey (2014): Money flexibility, price elasticity, and elasticity of marginal utility of consumption.

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Abstract

The development of G.Stigler’s original model of search describes the mathematical relationship between the elasticity of the marginal utility of consumption, the price elasticity, and the elasticity of the marginal utility of money income with respect to increase in the price of living and/or to inflation. This relationship can be used not only in economics of well-being but also in microeconomics where the increase in the price of living, i.e., in purchase price, can make consumption “bad” under the Veblen effect.

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