平狄克 微观经济学 第七版 课件 第三章

1 1 Consumer Choice x1and x2are goods Preferences of a consumer is represented by a set of indifference curves or a utility function Budget constraint budget line p1x1 p2x2 I budget set the set of all bundles which are affordable The optimal bundle 1 lies within the budget set feasible 2 attains the highest possible level of utility 2 Consumer Choice U4 E U3 D Clothing 20 30 40 0 U1 B 10 Food 40802060 U2 C A 3 Consumer Choice A consumer will choose a feasible bundle that lies on an indifference curve furthest away from the origin i e it leads to the highest utility among all bundles in the budget set When indifference curves are smooth and convex at an interior optimal bundle x1 0 and x2 0 the indifference curve is tangent to the budget line 2 1 2 1 P P MU MU or slope of indifference curve MRS slope of budget line price ratio 4 Consumer Choice MRS is the subjective price between the goods maximum number of units of good 2 the consumer is willing to give up to obtain one additional unit of good 1 P1 P2 is the objective price between the goods number of units of good 2 that the consumer needs to give up so that enough money is spared to buy one additional unit of good 1 At the optimal bundle smooth and convex IC interior optimum 2 2 1 1 2 1 2 1 or P MU P MU P P MU MU MRS 5 Could A be optimal Food Clothing 408020 20 30 40 0 10F U1 10C A 10 60 6 Interior Optimum U2 C Food 408020 Clothing 20 30 40 0 10 60 2 7 Corner Optimum U2U3U1 Food Clothing B U0 8 Corner Optimum At a corner optimum the consumer s MRS is not necessarily equal to the price ratio In this case at the optimum At a corner optimum if the MRS is significantly greater than the price ratio a small decrease in the price of clothing will not alter the consumer s optimal bundle C C F F C F C F P MU P MU P P MU MU or 9 Another Example of Corner Optimum lump sum subsidy to education Education Other Consumption U2 A U1 B C U3 10 Interior Optimum lump sum subsidy to education Education Other Consumption U2 A U1 B C U3 11 Individual Demand Curve What is the demand curve of an individual it shows the quantity of a good that a consumer wants to buy at different prices of the good Along the demand curve other factors other than own price affecting the quantity of the good that the consumer wants to buy stay constant 12 Individual Demand Curve 5 U3 D 4 U2 B 1220 Assume I 20 PC 2 PF 2 1 0 5 Food Clothing 6 A U1 4 10 3 13 Individual Demand Curve Demand Curve Food Price of Food H E G 2 00 41220 1 00 50 specific for I 20 and PC 2 14 Individual Demand Curve Every point on the demand curve comes from an optimal bundle for the consumer at the given price keeping other prices and income constant The level of utility changes as we move along the demand curve 15 How would a change in income affect the individual demand curve 16 Shift in Demand Curve with Changes in Income Food Clothing 3 4 A U1 5 10 B U2 D 6 18 U3 PF 1 PC 2 I 10 20 30 17 Shift in Demand Curve with Changes in Income Food Price of Food 1 4 D1 E 10 D2 G 18 D3 H 18 Normal Good and Inferior Good If consumption of a good increases with income it is a normal good If consumption of a good decreases with income it is an inferior good A good can be inferior at a certain levels of income but normal at some other levels of income Engel curve shows the relationship between income and consumption of a good 4 19 Engel Curve normal good Food 30 10 Income 20 41018 20 Change in Income and Consumption of Steak and Hamburger Hamburger Steak 30 U3 C 10 5 A U1 5 20 10 B U2 21 Engel Curve Inferior Normal Hamburger 30 10 Income 20 481216 22 How would a change in the price of another good affect the individual demand curve 23 Shift in Demand Curve of Clothing with a Change in the Price of Food 5 U3 D 4 U2 B 1220 Assume I 20 PC 2 PF 2 1 0 5 Food Clothing 6 A U1 4 10 24 Shift in Demand Curve of Clothing with a Change in the Price of Food Clothing Price of Clothing 2 4 D2 PF 1 5 D3 PF 5 6 D1 PF 2 5 25 Substitutes and Complements Substitutes increase in the price of one good higher quantity demanded of the other e g movie tickets and movie DVD rice and noodle Complements increase in the price of one good lower quantity demanded of the other e g movie and popcorn gasoline and motor oil computer and software Two goods could be substitutes or complements or independent at different price ranges 26 Effect of a Price Change We can decompose the effect of a price change total price effect on the quantity demanded of a good into substitution effect income effect 27 Effect of a Price Change P1 B A X1 X2 28 Substitution Effect Due to a change in relative price Consumers tend to buy more of the good that has become relatively cheaper buy less of the other good s that has become relatively more expensive Substitution effect is the change in the consumption of a good associated with a change in its price holding the level of utility constant When the price of a good declines the substitution effect always leads to an increase in the quantity demanded of the good 29 Income Effect Consumers experience an increase in real purchasing power when the price of a good falls as if they have more income than before Income effect is the change in the consumption of the good brought about by the increase in purchasing power holding relative prices constant When a person s income increases the quantity demanded for a good may increase or decrease depending on whether the good is normal or inferior 30 Income and Substitution Effects Food as a Normal Good 6 31 Income and Substitution Effects Food as an Inferior Good 32 Income and Substitution Effects A special case Giffen good the income effect may theoretically be large enough to cause the demand curve for a good to slope upward this basically never occurs and is of little practical interest 33 Market Demand Curve A curve that shows the quantity of a good that consumers in a market want to buy at different prices of that good The sum of all the individual demand curves in the market Horizontal summation for any given price add up the quantity demanded by all consumers in the market 34 Horizontal Summation of Individual Demand Curves 35 Market Demand Factors that influence the demands of consumers will also affect the market demand The market demand curve will shift to the right as more consumers enter the market 36 Consumer Surplus The difference between the maximum amount a consumer is willing to pay for a good and the amount actually paid Aggregate benefit that consumers obtain from being able to buy a good in the market Can be calculated from the demand curve 7 37 Consumer Surplus and Individual Demand 38 Consumer Surplus and Market Demand 39 Production 40 Demand Theory Preferences Budget constraint Optimal bundle quantity demanded at a particular price Optimal bundle at different prices individual demand curve Horizontal summation of individual demand curves market demand curve 41 Supply Theory Technology production function isoquants Isocost line At any output level q optimal input combination lowest cost to produce q Lowest costs at different q s cost curves of a firm Marginal cost curve optimal output level at different prices supply curve of a firm Horizontal summation of supply curves of firms market supply curve 42 Production Technology A production function of two inputs q F K L output q is a function of capital K and labor L with a given production function technology is fixed if technology improves more output can be produced from a given amount of inputs a production function describes what is technically feasible when the firm is operating in the most efficient way 8 43 Short Run and Long Run Short Run quantities of one or more inputs factors of production cannot be changed these inputs are called fixed inputs Long Run all production inputs are variable Short run and long run are not time specific 44 Production with One Variable Input K is fixed in the short run Labor Output Total Product A B C D 45 MP and AP of Labor Average Product Output Labor E Marginal Product 46 Law of Diminishing Marginal Returns With some input s fixed and a variable input increasing the marginal product of this variable input will eventually fall 47 Improvement in Technology Output Labor 023456789101 A O1 C O3 O2 B 48 Production with Two Variable Inputs When more than one inputs are variable there are different combinations of inputs that can lead to the same level of output which combination is the best Isoquant a curve that shows all combinations of inputs that leads to the same level of output isoquants production function Map of isoquants 9 49 Isoquants two variable inputs Labor12345 q1 55 q2 75 q3 90 1 2 3 4 5 Capital