Equivalent Variation

Denoted as EV.

Equivalent variation is the income change instead of price change, but has the same effect on consumer utility as price change.


  • In the graph, we only know that X decrease; for Y, since we don't know which is larger between income effect and substitution effect, we can't judge Y's movement.
  • If Y denotes money, EV=Y1-Y2

See also

Indifference curve relative concepts
Compensating Variation

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License