讲义微观课件z

1、Chapter 2Consumer Behavior and Demand Theory(4)Chapter 2 includes:n 2.1 Preference and Utilityn 2.2 Utilityization and Choicen 2.3 Comparative Static Analysis in Optimal Choicen 2.4 Income and Substitution Effectsn 2.5 Market Demand and Elasticity2学院Overview of Last Classn How to Get Demand Function

2、 (Algebra and Graph)n Marshallian（） Demand Functionn Price-Consumption Curve（价格-消费线） and Demand Curven Income-Consumption Curve（收入-消费线） andEngel Curve（曲线）n Examples of relative static equilibrium3学院2.4 Income and Substitution Effectsn 2.4.1 Definition of Substitution and Income Effectn 2.4.2 Hicks A

3、pproach（法) :SE and IEfor Normal, Inferior and Giffen Goodn 2.4.3 Slutsky Approach（法）:SEand IE for Normal, Inferior and Giffen Goodn 2.4.4 Application4学院Review: Construction of Individual Demand CurvesYBudget constraint for PXBudget constraint for PXBudget constraint for PXU3U2 U1X0XX”X”Priceence cur

4、ve mapPXPX”PX”X0XX”X”(b) Demand curve5学院(a) Individual's indifferdxReview of Construction of Individual Demand Curvesn The demand curve (dX) is downward slopingshowing that when the price of X falls, the quantity demanded of X increases.Law of Demand(需求法则)n Why do some goods violate Law of Deman

5、d?n for example: Giffen Goodn this result follows from the substitution(替代效应) and income effects（收入效应）.6学院2.4 Income and Substitution Effectsn 2.4.1 Definition of Substitution and Income Effectn 2.4.2 Hicks Approach（法) :SE and IEfor Normal, Inferior and Giffen Goodn 2.4.3 Slutsky Approach（法）:SEand I

6、E for Normal, Inferior and Giffen Goodn 2.4.4 Application7学院2.4.1 Definition of Substitution and Income EffectA change in the price of a good on the demand has two effects: Substitution & Income EffectSubstitution Effect(替代效应)the extra purchase of a good now that it is, after the price of this g

7、ood fall, relatively cheaper than other substitutes in consumption.Income Effect(收入效应)the extra purchase of a good that is caused by anincrease in real purchasing power（实际力）of the consumer when the price of one good falls.学院82.4.1 Definition of Substitution and Income EffectX1X3=X1X2+X2X3总效应=替代效应+收入

8、效应9学院2.4.1 Definition of Substitution and Income Effectn 实际收入不变的含义：n Slusky的定义:在价格变动后,欲维持原的组合所必须付出的金额。n Hicks的定义:在价格变动后,欲维持原 来满足的程度所必须付出的最小金额。10学院Two Definitions of holding real purchasing power constantySlutsky Compensated BudgetLine（补偿预算线）Holding original bundle ofAgoods constantHicks CompensatedE

9、2E1Budget Line(补偿预算线)Holding Utility(Satisfaction) Constant。0B1xB2F2学院F111Two Definitions of holding real purchasing power constantI=100,PX=4,PY=2X的价格下降至PX=3，yAE2E1C（10，30）C(15,20)0B1xB2F2学院F112Hicks的不变收入为：3X15+2X20=85实际收入变化了：100-85=15Slutsky的不变收入为：3X10+2X30=90实际收入变化了：100-90=10Two Methods of Substit

10、ute and Income Effect Analysisn According two definitions of real purchasing power, there are two approaches that can be used to analyze Substitute and Income Effectn Hicks approach(n Slutsky approach（分析法)分析法）13学院2.4 Income and Substitution Effectsn 2.4.1 Definition of Substitution and Income Effect

11、n 2.4.2 Hicks Approach（法) :SE and IEfor Normal, Inferior and Giffen Goodn 2.4.3 Slutsky Approach（法）:SEand IE for Normal, Inferior and Giffen Goodn 2.4.4 Application14学院Hicks Approach: Income and Substitution Effectsn Substitution Effectn The substitution effect is the change in a goods consumption a

12、ssociated with a change in the price of the good, with the level of utility held constant.n When the price of a good declines, the substitution effect always leads to an increase in the quantity of the good demanded. (价格下降，由S.E.导致需求增加)学院15Hicks Approach: Income and Substitution Effectsn Income Effec

13、tn The income effect is the change in a goods consumption brought about by the increase in purchasing power, with the price of the good held constant.n When as income increases, thequantity demanded for the product mayincrease or decrease.（依据不同性质的通过I.E.会引起需求的不商品， 同变动）16学院1.Hicks Approach: Income and

14、 Substitution Effects: A Normal Good CaseYRY1ACBY2U2Substitution EffectU1XOX1X3SX2T17学院Total EffectIncome EffectThe income effect, X3X2,( from C to B) keeps relativeprices constant but increases purchasing power.PX fall, S.E>0 I.E>0T.E>0The substitution effect,X1X3, (from point A to C), cha

15、nges therelative prices but keeps real income(satisfaction) constant.When the price of a good increases, the quantity of the good demanded will declines.18学院PX rises, S.E<0 I.E<0T.E=S.E+I.E<02.Hicks Approach:Income and Substitution Effects: Inferior GoodYRABU2CSubstitution EffectU1OX1X3STX2

16、X19学院Total EffectIncome EffectPX fall, S.E>0 I.E<0S.E>I.ET.E>0Since food is an inferior good, the income effect is negative. However, the substitution effect is larger than the income effect.3.Hicks Approach:Income and Substitution Effects_ Giffen Goodn The Giffen Good（品）n The income eff

17、ect may theoretically be large enough to cause the demand curve for a good to slope upward.n This rarely occurs and is of little practical interest.20学院3.Hicks Approach:Income and Substitution Effects: Giffens GoodYBABC1CBsubstitution effectBC0X1X2X3北 income effect: X021Total EffectIf the income eff

18、ect swamps the substitution effect, the total effect is positive:A GIFFEN GOOD.PX fall, S.E>0 I.E<0S.E<I.ET.E<0Giffens Paradox(悖论)n When the price of potatoes rose in Ireland the consumption of potatoes also increased.n Potatoes were not only an inferior good but constituted the source o

19、f a large portion of Irish peoples income.n The situation in which an increase in a goods price leads people to consume more of the good is called Giffens paradox.22学院Giffens Paradoxn If the income effect of a price change is strong enough with an inferior good, it is possible for the quantity deman

20、ded to change in the same direction as the price change.n this phenomenon was observed by English economist Robert Giffen.23学院2.4 Income and Substitution Effectsn 2.4.1 Definition of Substitution and Income Effectn 2.4.2 Hicks Approach（法) :SE and IEfor Normal, Inferior and Giffen Goodn 2.4.3 Slutsky

21、 Approach（法）:SEand IE for Normal, Inferior and Giffen Goodn 2.4.4 Application24学院2.4.3 Slutsky Approach（ 法）:SE and IEn Slutskys insight was that the effects on quantities demanded of any price change can always be decomposed into a substitution effect and an income effect.n The overall change in qua

22、ntities demanded due to a price change is the sum of the substitution and income effects.25学院Substitution Effectn Slutsky isolated the change in quantities demanded due only to the change in relative prices by asking “What is the change in quantities demanded when the consumers income is adjusted so

23、 that, at the new prices, she can only just buy the original bundle?”26学院Substitution Effect Onlyx2Lowering p1 makes good 1 relatively cheaper and causes a substitution fromgood 2 to good 1. A to point C is theThe change from point substitution effect.ACx1x1 Slusky Substitution Effect学院x127And Now T

24、he Income Effectx2The income effect is the change from point C to point B.ABCx1x1x128 Slutsky Income EffectSlutsky Substitution EffectThe Overall Change in Demandx2ABCx1x1x129学院The overall effect on demands of the change in p1 is the sum of the income and substitution effects. This is the change fro

25、m point A to point B.1.Slutskys Effects for Normal Goodsx2ABCx1x1x130学院PX fall, S.E>0 I.E>0T.E>0Good 1 is normal because an increase to income causes demand to rise. So the incom and substitution effects Reinforce each other.1.Slutskys Effects for Normal Goodsn Since both the substitution a

26、nd income effects increase demand when own-price decreases, the ordinary demand curve for a normal good must slope downwards.n The Law of Downward-Sloping Demand therefore always applies to normal goods.31学院2.Slutskys Effects for Income-InferiorGoodsx2BACx1x1132学院PX fall, S.E>0 I.E<0S.E>I.ET.E>0The overall changes to demand are the sums of the substitution and income effects.3.Slutskys Effects for Giffen GoodsA decrease in p1 causes a decrease in the quanti