Mankiw Economics Chap_21 中山大学吴柏林教授“曼昆·经济学原理”绝密资料

1、The Theory of Consumer ChoiceChapter 21Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.The theory of consumer

2、choice addresses the following questions:uDo all demand curves slope downward?uHow do wages affect labor supply?uHow do interest rates affect household saving?uDo the poor prefer to receive cash or in-kind transfers?The Budget ConstraintuThe budget constraint depicts the consumption “bundles” that a

3、 consumer can afford.uPeople consume less than they desire because their spending is constrained, or limited, by their income.The Budget ConstraintIt shows the various combinations of goods the consumer can afford given his or her income and the prices of the two goods.The Consumers OpportunitiesPin

4、ts ofPepsiNumber ofPizzasSpendingon PepsiSpendingon PizzaTotalSpending0100$ 0$1,000$1,00050901009001,000100802008001,000150703007001,000200604006001,000250505005001,000300406004001,000350307003001,000400208002001,000450109001001,00050001,00001,000Copyright 2001 by Harcourt, Inc. All rights reservedT

5、he Consumers Budget ConstraintuAny point on the budget constraint line indicates the consumers combination or tradeoff between two goods.uFor example, if the consumer buys no pizzas, he can afford 500 pints of Pepsi (point B). If he buys no Pepsi, he can afford 100 pizzas (point A). The Consumers Bu

6、dget Constraint.Quantityof PizzaQuantityof Pepsi0Consumersbudget constraint500B100AThe Consumers Budget ConstraintuAlternately, the consumer can buy 50 pizzas and 250 pints of Pepsi. The Consumers Budget Constraint.Quantityof PizzaQuantityof Pepsi025050100500BCAConsumersbudget constraintThe Consumer

7、s Budget ConstraintuThe slope of the budget constraint line equals the relative price of the two goods, that is, the price of one good compared to the price of the other.uIt measures the rate at which the consumer will trade one good for the other.Preferences: What the Consumer WantsA consumers pref

8、erence among consumption bundles may be illustrated with indifference curves.Representing Preferences with Indifference CurvesAn indifference curve shows bundles of goods that make the consumer equally happy.The Consumers Preferences.Quantityof PizzaQuantityof Pepsi0CBAIndifferencecurve, I1 DI2uThe

9、consumer is indifferent, or equally happy, with the combinations shown at points A, B, and C because they are all on the same curve.The Consumers PreferencesThe Marginal Rate of SubstitutionuThe slope at any point on an indifference curve is the marginal rate of substitution.uIt is the rate at which

10、 a consumer is willing to substitute one good for another.uIt is the amount of one good that a consumer requires as compensation to give up one unit of the other good.The Consumers Preferences.Quantityof PizzaQuantityof Pepsi0CBADIndifferencecurve, I1 I21MRSProperties of Indifference CurvesHigher in

11、difference curves are preferred to lower ones.Indifference curves are downward sloping.Indifference curves do not cross.Indifference curves are bowed inward.Property 1: Higher indifference curves are preferred to lower ones.uConsumers usually prefer more of something to less of it. uHigher indiffere

12、nce curves represent larger quantities of goods than do lower indifference curves.Property 1: Higher indifference curves are preferred to lower ones.Quantityof PizzaQuantityof Pepsi0CBADIndifferencecurve, I1 I2Property 2: Indifference curves are downward sloping.uA consumer is willing to give up one

13、 good only if he or she gets more of the other good in order to remain equally happy.uIf the quantity of one good is reduced, the quantity of the other good must increase.uFor this reason, most indifference curves slope downward.Property 2: Indifference curves are downward sloping.Quantityof PizzaQu

14、antityof Pepsi0Indifferencecurve, I1 Property 3: Indifference curves do not cross.uPoints A and B should make the consumer equally happy.uPoints B and C should make the consumer equally happy.uThis implies that A and C would make the consumer equally happy.uBut C has more of both goods compared to A

15、.Property 3: Indifference curves do not cross.Quantityof PizzaQuantityof Pepsi0CABProperty 4: Indifference curves are bowed inward.uPeople are more willing to trade away goods that they have in abundance and less willing to trade away goods of which they have little.uThese differences in a consumers

16、 marginal substitution rates cause his or her indifference curve to bow inward. 1MRS = 183IndifferencecurveAProperty 4: Indifference curves are bowed inward.Quantityof PizzaQuantityof Pepsi014237B1 MRS = 646Two Extreme Examples of Indifference CurvesuPerfect substitutesuPerfect complementsPerfect Su

17、bstitutesuTwo goods with straight-line indifference curves are perfect substitutes. uThe marginal rate of substitution is a fixed number. Perfect SubstitutesDimes0Nickels2142I1I263I3Perfect ComplementsTwo goods with right-angle indifference curves are perfect complements.Perfect ComplementsRight Sho

18、es0LeftShoes7575I1I2Optimization: What the Consumer ChoosesuConsumers want to get the combination of goods on the highest possible indifference curve.uHowever, the consumer must also end up on or below his budget constraint.Optimization: What the Consumer ChoosesuCombining the indifference curve and

19、 the budget constraint determines the consumers optimal choice.uConsumer optimum occurs at the point where the highest indifference curve and the budget constraint are tangent.The Consumers Optimal ChoiceThe consumer chooses consumption of the two goods so that the marginal rate of substitution equa

20、ls the relative price.The Consumers Optimal ChoiceAt the consumers optimum, the consumers valuation of the two goods equals the markets valuation.The Consumers Optimum.Quantityof PizzaQuantityof Pepsi0I1 I2 I3 Budget constraintABOptimumHow Changes in Income Affect the Consumers ChoicesuAn increase i

21、n income shifts the budget constraint outward.uThe consumer is able to choose a better combination of goods on a higher indifference curve.An Increase in Income.Quantityof PizzaQuantityof Pepsi0I1I2 2. raising pizza consumption3. and Pepsiconsumption.Initial optimumNew budget constraint1. An increas

22、e in income shifts the budget constraint outwardInitial budget constraintNew optimumHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Normal versus Inferior GoodsuIf a consumer buys more of a good when his or her income rises, the good is called a normal good.uIf a consumer buys

23、 less of a good when his or her income rises, the good is called an inferior good.New budget constraint1. When an increase in income shifts the budget constraint outward.An Inferior Good.Quantityof PizzaQuantityof Pepsi0 Initial optimumI1New optimumI22. . pizza consumption rises, making pizza a norm

24、al good. 3. . but Pepsi consumption falls, making Pepsi an inferior good.Initial budget constraintHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.How Changes in Prices Affect Consumer ChoicesA fall in the price of any good rotates the budget constraint outward and changes the

25、slope of the budget constraint.A Change in Price.Quantity of Pizza100Quantity of Pepsi1,0005000I1New budget constraint3. and raising Pepsiconsumption.Initial budget constraint2. reducing pizza consumption1. A fall in the price of Pepsi rotates the budget constraint outwardNew optimumI2Harcourt, Inc.

26、 items and derived items copyright 2001 by Harcourt, Inc.Income and Substitution EffectsuA price change has two effects on consumption.uAn income effectuA substitution effectThe Income EffectThe income effect is the change in consumption that results when a price change moves the consumer to a highe

27、r or lower indifference curve.The Substitution EffectThe substitution effect is the change in consumption that results when a price change moves the consumer along an indifference curve to a point with a different marginal rate of substitution.A Change in Price: Substitution EffectA price change fir

28、st causes the consumer to move from one point on a indifference curve to another on the same curve.uIllustrated by movement from point A to point B.A Change in Price: Income EffectAfter moving from one point to another on the same curve, the consumer will move to another indifference curve.u Illustr

29、ated by movement from point B to point C.Income and Substitution Effects.Quantity of PizzaQuantityof Pepsi0AInitial optimumI1New budget constraintInitial budget constraintI2C New optimumIncome effectIncome effectSubstitution effectBSubstitution effectHarcourt, Inc. items and derived items copyright

30、2001 by Harcourt, Inc.Income and Substitution Effects When the Price of Pepsi FallsGoodIncome EffectSubstitution EffectTotal EffectPepsiConsumer is richer,so he buys more Pepsi.Pepsi is relativelycheaper, so consumerbuys more Pepsi.Income andsubstitutioneffects act insame direction,so consumer buys

31、more Pepsi.PizzaConsumer is richer,so he buys more pizza.Pizza is relativelymore expensive,so consumer buys less pizza.Income andsubstitutioneffects act inopposite directions,so the total effecton pizza consumptionis ambiguous.Deriving the Demand CurveA consumers demand curve can be viewed as a summ

32、ary of the optimal decisions that arise from his or her budget constraint and indifference curves.Deriving the Demand Curve.(a) The Consumers Optimum(b) The Demand Curve for PepsiI1I2ABInitial budget constraintNew budget constraint50150Quantity of PizzaQuantity of Pepsi00Quantity of Pepsi501501$2 Pr

33、ice of PepsiABDo all demand curves slope downward?uDemand curves can sometimes slope upward.uThis happens when a consumer buys more of a good when its price rises.Giffen GoodsuEconomists use the term Giffen good to describe a good that violates the law of demand. uGiffen goods are inferior goods for

34、 which the income effect dominates the substitution effect. uThey have demand curves that slope upwards.Quantityof MeatAQuantity ofPotatoes0ECI2I1Initial budget constraintNew budgetconstraintDBOptimum with lowprice of potatoesOptimum with highprice of potatoes1. An increase in the price of potatoes

35、rotates the budget.2.which increases potato consumption if potatoes are a Giffen good.A Giffen Good.How do wages affect labor supply?uIf the substitution effect is greater than the income effect for the worker, he or she works more.uIf income effect is greater than the substitution effect, he or she

36、 works less.Hours of Leisure02,000$5,00060Consumption100OptimumI3I2I1The Work-Leisure Decision.Hours of LaborSupplied0Wage. . . the labor supply curve slopes upward.Hours ofLeisure0Consumption(a) For a person with these preferencesI2I1BC2BC12. hours of leisure decrease3. .and hours of labor increase

37、. 1. When the wage risesAn Increase in the Wage.Hours of LaborSupplied0Wage. . . the labor supply curve slopes backward.Hours ofLeisure0Consumption(b) For a person with these preferencesI2I1BC2BC11. When the wage risesAn Increase in the Wage.2. hours of leisure increase3. .and hours of labor decreas

38、e. How do interest rates affect household saving?uIf the substitution effect of a higher interest rate is greater than the income effect, households save more.uIf the income effect of a higher interest rate is greater than the substitution effect, households save less.Consumptionwhen Young055,000$11

39、0,000$50,000Consumptionwhen Old100,000OptimumI3I2I1BudgetconstraintThe Consumption-Saving Decision.An Increase in the Interest Rate.0Consumption when Old1. A higher interest rate rotates the budget constraint outward.I2I1BC2BC12. resulting in lower consumption when young and, thus, higher saving.Con

40、sumption when YoungHours ofLeisure0I2I1BC2BC1Consumption when Old1. A higher interest rate rotates the budget constraint outward.2. resulting in higher consumption when young and, thus, lower saving.(a) Higher Interest Rate Raises Saving(b) Higher Interest Rate Lowers SavingHarcourt, Inc. items and

41、derived items copyright 2001 by Harcourt, Inc.How do interest rates affect household saving?Thus, an increase in the interest rate could either encourage or discourage saving.Do the poor prefer to receive cash or in-kind transfers?If an in-kind transfer of a good forces the recipient to consume more

42、 of the good than he would on his own, then the recipient prefers the cash transfer.Do the poor prefer to receive cash or in-kind transfers?If the recipient does not consume more of the good than he would on his own, then the cash and in-kind transfer have exactly the same effect on his consumption

43、and welfare.Cash TransferIn-Kind Transfer(a) The Constraint Is Not BindingNonfoodConsumption0$1,000$1,000FoodABI2I1BC1BC2(with $1,000 cash)NonfoodConsumption0FoodABI2I1BC1BC2(with $1,000 food stamps)Cash versus In-Kind Transfers.Cash TransferIn-Kind Transfer(b) The Constraint Is BindingNonfoodConsum

44、ption0$1,000$1,000FoodABI2I1BC1BC2(with $1,000 cash)NonfoodConsumption0FoodABI2I1BC1BC2(with $1,000 food stamps)Cash versus In-Kind Transfers.CI3SummaryuA consumers budget constraint shows the possible combinations of different goods he can buy given his income and the prices of the goods.uThe slope

45、 of the budget constraint equals the relative price of the goods.uThe consumers indifference curves represent his preferences.SummaryuPoints on higher indifference curves are preferred to points on lower indifference curves.uThe slope of an indifference curve at any point is the consumers marginal r

46、ate of substitution.uThe consumer optimizes by choosing the point on his budget constraint that lies on the highest indifference curve.SummaryuWhen the price of a good falls, the impact on the consumers choices can be broken down into an income effect and a substitution effect.uThe income effect is

47、the change in consumption that arises because a lower price makes the consumer better off. uThe income effect is reflected by the movement from a lower to a higher indifference curve.SummaryuThe substitution effect is the change in consumption that arises because a price change encourages greater co

48、nsumption of the good that has become relatively cheaper.uThe substitution effect is reflected by a movement along an indifference curve to a point with a different slope.SummaryuThe theory of consumer choice can explain:uWhy demand curves can potentially slope upward.uHow wages affect labor supply.

49、uHow interest rates affect household saving.uWhether the poor prefer to receive cash or in-kind transfers.Graphical ReviewThe Consumers Budget Constraint.Quantityof PizzaQuantityof Pepsi0Consumersbudget constraint500B100AThe Consumers Budget Constraint.Quantityof PizzaQuantityof Pepsi025050100500BCA

50、Consumersbudget constraintThe Consumers Preferences.Quantityof PizzaQuantityof Pepsi0CBAIndifferencecurve, I1 DI2The Consumers Preferences.Quantityof PizzaQuantityof Pepsi0CBADIndifferencecurve, I1 I21MRSProperty 1: Higher indifference curves are preferred to lower ones.Quantityof PizzaQuantityof Pe

51、psi0CBADIndifferencecurve, I1 I2Property 2: Indifference curves are downward sloping.Quantityof PizzaQuantityof Pepsi0Indifferencecurve, I1 Property 3: Indifference curves do not cross.Quantityof PizzaQuantityof Pepsi0CABProperty 4: Indifference curves are bowed inward.1MRS = 183IndifferencecurveAQu

52、antityof PizzaQuantityof Pepsi014237B1 MRS = 646Perfect SubstitutesDimes0Nickels2142I1I263I3Perfect ComplementsRight Shoes0LeftShoes7575I1I2The Consumers Optimum.Quantityof PizzaQuantityof Pepsi0I1 I2 I3 Budget constraintABOptimumAn Increase in Income.Quantityof PizzaQuantityof Pepsi0I1I2 2. raising

53、 pizza consumption3. and Pepsiconsumption.Initial optimumNew budget constraint1. An increase in income shifts the budget constraint outwardInitial budget constraintNew optimumHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.An Inferior Good.New budget constraint1. When an incre

54、ase in income shifts the budget constraint outward.Quantityof PizzaQuantityof Pepsi0 Initial optimumI1New optimumI22. . pizza consumption rises, making pizza a normal good. 3. . but Pepsi consumption falls, making Pepsi an inferior good.Initial budget constraintHarcourt, Inc. items and derived items

55、 copyright 2001 by Harcourt, Inc.A Change in Price.Quantity of Pizza100Quantity of Pepsi1,0005000I1New budget constraint3. and raising Pepsiconsumption.Initial budget constraint2. reducing pizza consumption1. A fall in the price of Pepsi rotates the budget constraint outwardNew optimumI2Harcourt, In

56、c. items and derived items copyright 2001 by Harcourt, Inc.Income and Substitution Effects.Quantity of PizzaQuantityof Pepsi0AInitial optimumI1New budget constraintInitial budget constraintI2C New optimumIncome effectIncome effectSubstitution effectBSubstitution effectHarcourt, Inc. items and derive

57、d items copyright 2001 by Harcourt, Inc.Deriving the Demand Curve.(a) The Consumers Optimum(b) The Demand Curve for PepsiI1I2ABInitial budget constraintNew budget constraint50150Quantity of PizzaQuantity of Pepsi00Quantity of Pepsi501501$2 Price of PepsiABQuantityof MeatAQuantity ofPotatoes0ECI2I1Initial budget constraintNew budgetconstraintDBOpt