平狄克《微观经济学》课后答案 16

1、PART IVINFORMATION, MARKET FAILURE,AND THE ROLE OF GOVERNMENTCHAPTER 16GENERAL EQUILIBRIUM AND ECONOMIC EFFICIENCYTEACHING NOTESThis chapter brings together material from Chapters 1, 3, 6 - 10, and 14. Due to the amount of material and its theoretical nature, there are fewer examples than in previou

2、s chapters. The theme is the efficiency of competitive markets in general equilibrium.The distinction between partial and general equilibrium is readily accepted by students, but they might find the geometi-y of Figure 16.1 intimidating. Exercise (6) offers students practice with the algebra underly

3、ing Figure 16.1. Although this is not a complete discussion of general equilibrium, students can learn to appreciate the limitations of a partial equilibrium analysis and the need to consider interactions among markets. Stress the importance of using a general equilibrium analysis for economy-wide p

4、olicies, e.g., raising the minimum wage.To provide a context for the discussion of exchange economies, you might start by discussing two children trading cookies and potato chips at lunchtime. For a more serious example, see Radford, llThe Economic Organization of a POW Camp,“ Economica (November 19

5、45). Another application is provided in Exercise (4). Students find the definition of Pareto optimality (an allocation is Pareto- efficient if goods cannot be reallocated to make someone better off without making someone else worse off) confusing because of its “double negative“ expression (i.e., “c

6、annot and without“ in the same sentence). Try to express the same idea in other ways, e.g., “An allocation is not Pareto-efficient if goods can be traded so that one person is better off and everyone else is just as well off. Always ask your students whether a point is Pareto efficient. Define a Par

7、eto-improving trade. Show why movements toward the contract curve are Pareto-improving, while movements along the contract curve are not Pareto-improving. Point out that all competitive equilibria are Pareto-efficient but not all Pareto-efficient points are in equilibrium. Emphasize that the competi

8、tive equilibrium depends on the initial allocation, which will elucidate the distinction between equity and final allocation in a distribution.Use the Edgeworth box to show the distinction between efficiency and equity; e.g., a point on the contract curve near one corner might be less preferred beca

9、use of equity considerations than a point off the curve but nearer to the middle of the box. This conflict introduces the problem of defining equity and incorporating it into an economic analysis. Table 16.2 presents four definitions of equity. After discussing them, ask the class to vote on which d

10、efinition is closest to their concept of equity. Then ask the students to defend their choices, which should lead to an interesting discussion.The analysis in Section 16.4 follows from Section 16.2 by introducing students to production in an Edgeworth box (see Exercise (6). This analysis leads to th

11、e definition of input efficiency and the production contract curve. Exei*cise (3) focuses on input efficiency with monopsony and monopoly. Apply the definition of Pareto optimality to production. Exercise (2) discusses the shape of the production-possibilities frontier, PPF. Before discussing the ge

12、ometry of Figure 16.11, make sure that students know the requirements for output efficiency. Unless you have introduced the investmentpossibilities frontier and the accompanying analysis in Chapter 15, the geometry will be new. An alternative approach to Figure 16.10 is to draw the Edge worth box fo

13、r exchange inside the PPF with one of the vertices at point C. Show where the marginal rates of substitution are equal for both individuals and also equal to the marginal rate of transformation. Section 16.5 introduces comparative advantage and applies general equilibrium analysis to the gains from

14、international (two-countiy) trade. Section 16.6 serves as a bridge between Chapter 16 and the following two chapters.REVIEW QUESTIONSWhy can feedback effects make a general equilibrium analysis substantially different from a partial equilibrium analysis?A partial equilibrium analysis focuses on the

15、interaction of supply and demand for one market. It ignores the influences that shifts in supply and demand in one market might have on markets for complements and substitutes. A general equilibrium analysis attempts to account for the influences on related markets that could, in turn, influence the

16、 market of primary concern. Ignoring these feedback effects can lead to inaccurate forecasts of the full influence of changes in either supply or demand. Although analysis should incorporate all feedback effects, one task of the economist is to determine the markets that are most closely related to

17、the market of primary concern. Attention is directed toward these markets, thus enabling better forecasts of change in equilibrium prices and quantities.In the Edgeworth box diagram, explain how one point can simultaneously represent the market baskets owned by two consumers.The Edgeworth box diagra

18、m allows us to represent the distribution of two goods between two individuals. The box is formed by inverting the indifference curves of one individual and superimposing these on the indifference curves of another individual. The sides of the box represent the total amounts of the two goods availab

19、le to consumers. On the vertical axis, we read off the amount to each individual as the difference between the horizontal axis and the point. For one individual, this is the distance from the bottom of the box to the top, and for the other, this is the distance from the top of the box to the bottom.

20、 Similarly, the horizontal axis represents amounts of a second good distributed to the two individuals. Each point in the box represents a different allocation of the two goods between the two individuals.In the analysis of exchange using the Edgeworth box diagram, explain why both consumers margina

21、l rates of substitution are equal at every point on the contract curve.The contract curve, in the context of an Edgeworth box diagram, is the set of points where the indifference curves of the two individuals are tangent. We know that the marginal rate of substitution is equal to the (negative) slop

22、e of the indifference curves. Also, when two curves are tangent at a point, their slopes are equal at that point. Thus, by defining the contract curve as a set of indifference curve tangencies, the marginal rates of substitution between the two goods are equal for the two individuals if we assume co

23、nvex indifference curves.“Since all points on a contract curve are efficient, they are all equally desirable from a social point of view. Do you agree with this statement? Explain.If society is only concerned with efficiency and not with equity, then all points on the contract curve are equally desi

24、rable. Since it is impossible to make comparisons of utility between individuals, economics focuses on efTiciency. But, if we are also concerned with equity (i.e., whether the final allocation is fair), then all points on the contract curve are not equally desirable.How does the utility possibilitie

25、s frontier relate to the contract curve?Since each point in an Edgeworth box can be compared to every other point by each individual, individuals can assign a preference ordering to all points. This pieference ordering is the utility function. We can graph these preference with levels of satisfactio

26、n (utility) fbr one individual on one axis and levels of satisfaction fbr a second individual on the other axis. (Of course, more than two individuals can be represented with more axes.) The utility-possibility frontier shows the levels of satisfaction achieved by each of two individuals when they h

27、ave traded to an efficient outcome on the contract cui-ve. While points that lie between the origin and the utility-possibility frontier are feasible they are not efficient because further trading will leave one individual better off without making the other individual worse off. Points outside the

28、frontier are not feasible unless the individuals are given greater amounts of one or both goods.In the Edgeworth production box diagram, what conditions must hold for an allocation to be on the production-contract curve? Why is a competitive equilibrium on the contract curve?When constructing an Edg

29、e worth box for the production of two goods with two inputs, each point in the box represents an allocation of the two inputs between the two production processes. With production, each point can be ordered according to the total output. These points lie on isoquants instead of on indifference cu)-v

30、es. Since each point simultaneously represents the allocation of inputs to two production processes, it lies on two isoquants, one for each production process. The production contract curve represents all combinations of inputs that are technically efficient. Thus, there would be no way to increase

31、the output of one good without decreasing the output of the other good.A competitive equilibrium is one point on the production-contract curve. It is the intersection of the production-contract curve and a line passing through the initial alkxjation with a slope equal to the ratio of prices. (The ra

32、tio of prices dictates the rates at which inputs can be traded in the market.) For a competitive equilibrium to hold, each producer must use inputs so that the slopes of the isoquants are equal to one another and also equal to the ratio of the prices of the two inputs. Therefore, the competitive equ

33、ilibrium is efficient in production. (This equilibrium assumes convex indifference curves.)How is the production-possibilities frontier related to the production contract curve?We can graph the quantities of each output produced by each allocation (each point in the Edgeworth box) on a two-dimension

34、al graph, where the vertical axis represents the output of one process and the horizontal axis represents the output of the other process. The production-contract curve is represented in this two-dimensional graph as the production possibilities frontier. Points inside this frontier are feasible but

35、 inefficient. Points outside the frontier are infeasible and only attainable when more inputs become available or production processes become more efficient.What is the marginal rate of transformation (MRT)? Explain why the MRT of one good for another is equal to the ratio of the marginal costs of p

36、roducing the two goods.The marginal rate of transformation, MRT, is equal to the absolute value of the slope of the production possibilities frontier. (Since the slope of the frontier is negative, we prefer to work with positive quantities; the magnitude is the absolute value of the slope.) The MRT

37、is the rate at which we can trade one output for another (instead of using inputs to produce another unit of one output, we could use them to produce another unit of the other output). Also, we know that the total cost of all inputs is the same at each point because we use the same total amount of e

38、ach input. In particular, along the production possibilities frontier, the ratio of marginal cost is equal to the ratio of changes in the two inputs (the marginal rate of transformation). Thus, the MRT is equal to the ratio of marginal costs of producing the two goods.Explain why goods will not be d

39、istributed efficiently among consumers if the MRT is not equal to the consumers marginal rate of substitution.If the marginal rate of transformation, MRT, is not equal to the marginal rate of substitution, MRS, we could reallocate inputs in producing output to leave the consumers better off. Where M

40、RT 工 MRS, the ratio of marginal cost will not be equal to the ratio of prices. We could increase the output of one good, sell this output in the market, and use the proceeds to increase the production of the other goods, leaving the consumer better off than in the initial position. Therefore, the in

41、itial allocation was not Pareto-efficient. Only when MRT = MRS will consumers be left worse off with a reallocation of inputs between the production processes.Why can free trade between two countries make consumers of both countries better off?Free trade between two countries expands each countrys e

42、ffective production possibilities frontier. Assuming each country has a comparative advantage in the production of some good or service, trade allows a country to specialize in the area where it has this advantage. It trades these outputs for those more cheaply produced in another countiy. Therefore

43、, specialization benefits many consumers in both countries.What are the four major sources of market failure? In each case, explain briefly why the competitive market does not operate efficiently.The four major sources of market failure are market power, incomplete information, externalities, and pu

44、blic goods. We know from the study of market structures that market power leads to situations where price does not equal marginal cost. In these situations, the producer is producing too little. Consumers could be made better off by redirecting inputs into the production of the good produced under a

45、 competitive market sti-ucture, thereby lowering price until price is equal to marginal cost. Incomplete information implies that prices do not reflect either the marginal cost of production or the change in utility from changes in consumption. Either too much or too little (at the extreme, none) is

46、 produced and consumed. Externalities occur when a consumption or production activity influences other consumption of production activities, and these effects are not reflected in market prices. Public goods are goods that can be consumed at prices below marginal cost (at the extreme, freely) becaus

47、e consumers cannot be excluded. In these four cases, prices do not send the proper signals to either producers or consumers to increase or decrease production or consumption. Thus, the market mechanism cannot equate social marginal costs with social marginal benefits.REVIEW EXERCISESIn the analysis

48、of an exchange between two people, suppose both people have identical preferences. Will the contract curve be a straight line? Explain. (Can you think of a counterexample?)Given that the contract curve intersects the origin for each individual, a straight line contract cui-ve would be a diagonal lin

49、e running from one origin to the other. The slopeYof this line is , where Y is the total amount of the good on the vertical axis and X is the total amount of the good on the horizontal axis. Q,力Care the amounts of the two goods allocated to one individual and Q，？2g D-Xy-Gre the amounts of the two go

50、ods allocated to the other individual; the contract curve may be represented by the equationy书kWe need to show that when the marginal rates of substitution for the two individuals are equal, MRS = MRV, and the allocation lies on the contract curve.For example, consider the utility function U = xfy,.

51、 Then地S、版=2幅k 2勒If MRS equals MRS2, then28k 2 融Is this point on the contract curve? Yes, becausex? = X - X and y2 = Y-必，This means thatgyxX-yxxYY-yx, or i J = Y-ylf and管F=f T守Ys =9.With this utility function we find MRS，= MRS2, and the contract curve is a straight line. However, if the two traders h

52、ave identical preferences but different incomes, the contract curve is not a straight line when one good is inferior.Give an example of conditions when the production possibilities frontier might not be concave.Most of the production-possibilities frontiers are bowed outwardi.e., they are strictly c

53、oncave to the origin. However, if the two goods are produced with identical production functions, decreasing the output of one will increase the output of the other by an equal amount. Then the production-possibilities frontier is a straight line.A monopsonist buys labor for less than the competitiv

54、e wage. What type of inefficiency will this use of monopsony power cause? How would your answer change if the monopsonist in the labor market were also a monopolist in the output market?When market power exists, the market will not allocate resources efficiently. If the wage paid by a monopsonist is

55、 below the competitive wage, too little labor will be used in the production process. However, output may increase because inputs are generally less costly. If the firm is a monopolist in the output market, output will be such that price is above marginal cost and output will clearly be less. With m

56、onopsony, too much may be produced; with monopoly, too little is produced. The incentive to produce too little could be less than, equal to, or greater than the incentive to produce too much. Only in a special configuration of marginal expenditure and marginal revenue would the two incentives be equ

57、al.Jane has 8 liters of soft drinks and 2 sandwiches. Bob, on the other hand, has 2 liters of soft drinks and 4 sandwiches. With these endowments, Janes marginal rate of substitution (MRS) of soft drinks for sandwiches is three and Bobs MRS is equal to one. Draw an Edgeworth box diagram to show whet

58、her this allocation of resources is efficient. If it is, explain why. If it is not, what exchanges will make both parties better off?Given that MRSBob w MRSJane, the current allocation of resources is inefficient. Jane and Bob could trade to make one of them better off without making the other worse

59、 off. This is represented in the Edgeworth box in Figure 16.4.Although we do not know the exact shape of Janes and Bobs indifference curves, we do know the slope of both indifference curves at the current allocation, because we know that MRS加伏二3 and MRSB0b = LAssume that the indifference curves show

60、n in the figure represent Janes and Bobs preferences. Then, both Jane and Bob would be better off (because they would be on indifference curves with greater levels of satisfaction) if Jane traded 1 liter for 1 sandwich, leaving her with 7 liters and 3 sandwiches. Note: if soft drinks and sandwiches