andMarketDemand微观经济学华侨大学,JeffCaldw.ppt

4 10 16
Food (units per month)
Slide 13
Individual Demand
Income Changes
The income-consumption curve traces out the utility-maximizing combinations of food and clothing associated with every income level.
are tangent to each budget line.
Food (units per month)
Slide 5
Effect of a Price Change
Clothing (units per
month)
6A
5
U1
B
4
The price-consumption curve traces out the utility maximizing market basket for the
U3
B U2
…but hamburger becomes an inferior good when the income consumption curve
bends backward between B and C.
U1
10
20
Hamburger 30 (units per month)
Slide 18
Chapter 4
Slide 4
Effect of a Price Change
Clothing (units per
month)
10
Assume:
•I = $20
•PC = $2 •PF = $2, $1, $.50
6A
5
U1
B
4
D U3U2Fra bibliotek4 12 20
Chapter 4
Three separate indifference curves
Price of
food
$1.00
An increase in income, from $10 to $20 to $30, with the prices fixed, shifts the consumer’s demand curve to the right.
E
G
H
Chapter 4
D3
D2 D1
e.g. movie tickets and video rentals
Chapter 4
Slide 23
Individual Demand
Substitutes and Complements
Individual Demand
Substitutes and Complements
1) Two goods are considered substitutes if an increase (decrease) in the price of one leads to an increase (decrease) in the quantity demanded of the other.
various prices for food.
Price-Consumption Curve
D
U3
U2
4 12 20
Chapter 4
Food (units per month)
Slide 6
Effect of a Price Change
Price of Food
E $2.00
Individual Demand relates the quantity of a good that a consumer will buy to the price of that good.
Chapter 4 Individual and
Market Demand
Topics to be Discussed
Individual Demand Income and Substitution Effects Market Demand Consumer Surplus
Chapter 4
Chapter 4
Slide 11
Effects of Income Changes
Clothing (units per
month)
Assume: Pf = $1 Pc = $2 I = $10, $20, $30
7 5 3
Chapter 4
Income-Consumption
Curve
D U3
2) At every point on the demand curve, the consumer is maximizing utility by satisfying the condition that the MRS of food for clothing equals the ratio of the prices of food and clothing.
($) on:
$10,000 19,000 29,000 39,000 49,000 69,000 and above
Entertainment 700 947
Owned Dwellings 1116 1725
Rented Dwellings1957 2170
Health Care
1031 1697
G
•H:Pf/Pc = .5/2 = .25 = MRS
Demand Curve
H
4 12 20
Chapter 4
Food (units per month)
Slide 10
Individual Demand
Income Changes
Using the figures developed in the previous chapter, the impact of a change in the income can be illustrated using indifference curves.
Food
2656 3385
Clothing
859 978
1274 2253 2371 1918 4109 1363
1514 2054 3243 4454 2536 2137 1820 2052 4888 5429 1772 1778
2654 4300 5793 9898 1540 1266 2214 2642 6220 8279 2614 3442
Chapter 4
Slide 14
Individual Demand
Income Changes
An increase in income shifts the budget line to the right, increasing consumption along the income-consumption curve.
normal goods.
10
Food (units
0
4
8
12
16 per month)
Chapter 4
Slide 20
Engel Curves
Income ($ per
month) 30
Engel curves slope
20
backward bending for inferior goods.
Chapter 4
Slide 16
Individual Demand
Normal Good vs. Inferior Good
Income Changes
When the income-consumption curve has a negative slope: The quantity demanded decreases with income. The income elasticity of demand is negative. The good is an inferior good.
1) The level of utility that can be attained changes as we move along the curve.
Chapter 4
Slide 8
Individual Demand
The Individual Demand Curve
Two Important Properties of Demand Curves
Chapter 4
Slide 17
An Inferior Good
Steak15 (units per
month) 10
5
A
5
Chapter 4
Income-Consumption
Curve
Both hamburger
and steak behave
C
as a normal good,
between A and B...
Individual Demand
Engel Curves
Engel curves relate the quantity of good consumed to income.
If the good is a normal good, the Engel curve is upward sloping.
Simultaneously, the increase in income shifts the demand curve to the right.
Chapter 4
Slide 15
Individual Demand
Normal Good vs. Inferior Good