微观经济学 第七讲

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5.7 Consumer Surplus
Objectives 1. Discuss what is meant by the term consumer surplus, and illustrate the concept using examples and a demand curve.
• The paradox of value (价值悖论) addresses the somewhat counterintuitive （与直觉相反的） observation that water costs less than diamonds in spite of the fact that water sustains life and diamonds are often simply decorative. • Note that the total utility from water is greater than the total utility from diamonds.
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5.6 The Paradox of Value
• How could it be? • The simplest answer: the supply and demand curves for water intersect at a very low price • while the supply and demand for diamonds yield a very high equilibrium price. (p.95) • Why? • Diamonds are very scarce, and the cost of getting extra ones is high • Water is relatively abundant, and the cost of getting extra ones is little in many areas in the world
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Review on Lecture Six
• Stated differently, the fundamental condition of consumer equilibrium can be written in terms of the MU and prices (P) of the different goods in the following way: (p.87)
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Outline
5.5 The Economics of Addiction 5.6 The Paradox of Value 5.7 Consumer Surplus 5A Indifference Curve
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5.5 The Economics of Addiction
• Demerit goods (有害商品) are goods whose consumption is deemed harmful. Governments sometimes intervene to discourage consumption of such goods. The demands for addictive substances are quit price-inelastic. • For example, many governments prohibits the sale and use of certain addictive drugs, such as heroin and cocaine.
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5.5 The Economics of Addiction
• What will be influenced in the market of demerit goods if governments prohibit the sale and use of these goods? • A sharp leftward shift in the supply curve • How about the consumption and price of these goods then? • Price-inelastic demand!
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Review on Lecture Six
• How to get market demand curve? • by summing up the quantities demanded by all the consumers • Goods are substitutes if an increase in the price of one increases the demand for the other. • Goods are complements if an increase in the price of one decreases the demand for the other. • Goods are independent if a price change for one has no effect on the demand for the other.
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5.7 Consumer Surplus
• More specifically, we pay the same price for each unit of a good we buy, from the first to the last. • Thus we pay for each unit what the last unit is worth. • By the law of diminishing marginal utility, the earlier units are worth more to us than the last. • Thus, we enjoy a surplus of utility on each of these earlier units.
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5.6 The Paradox of Value
Objectives 1. Describe the paradox of value and resolve it through application of the utility-maximizing rule.
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5.6 The Paradox of Value
Lecture Seven
Chapter 5 Demand and Consumer Behavior
2012.10.19
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Review on Lecture Six
• Marginal utility denotes the additional utility you get from the consumption of an additional unit of a commodity. (p.85) • The law of diminishing marginal utility states that, as the amount of a good consumed increases, the marginal utility of that good tends to decline. (p.85)
• What will happen then if the spending on drugs are so high? • Drug users now may engage in predatory crime. • Studies on this topic have documented that (p.94) “the market in illegal drugs promotes crime, destroys inner cities, spreads AIDS, corrupts law enforcement officials and politicians, produces and exacerbates poverty, and erodes the moral fabric of society.”
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5.5 The Economics of Addiction
• Qd declines very little • P increases a lot • Total spending on drugs increases sharply: 0GCH 0FBA
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5.5 The Economics of Addiction
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5.7 Consumer Surplus
• The paradox of value shows that total utility of a good does not determine its market price. • The gap between the total utility of a good and its total market value is called consumer surplus. (p.96) • Why there is the surplus for consumers? • The surplus arises because we “receive more than we pay for” as a result of the law of diminishing marginal utility.
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5.6 The Paradox of Value
• What does it imply? • The total utility form water consumption does not determine its price or demand. • Rather, water’s price is determined by its marginal utility, by the usefulness of the last glass of water. (p.96) • It is the large quantities that pull the marginal utilities so far down and thus reduce the prices of these vital commodities. (p.96)
MU
good 1

MU
good 2

Biblioteka Baidu
MU
good 3
p1
p2
p3
4
... M U p e r $ o f in c o m e
Review on Lecture Six
• Substitution effects describe the fact that as prices change along a demand curve, consumers substitute relatively cheaper goods into their market baskets. • Income effects describe the fact that as prices change along a demand curve, money income is held fixed, but real income or purchasing power changes.
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Review on Lecture Six
• Equimarginal Principle: a consumer will achieve maximum satisfaction or utility when the marginal utility of the last dollar spent on a good is exactly the same as the marginal utility of the last dollar spent on any other good. (p.87)