经典经济学入门教材英文讲义1(Principles of Economic)

Recent papers
• “One Chance in a Million: Altruism a nd the Bone Marrow Registry” • “The Effects of High Stakes High Sch ool Achievement Awards: Evidence from a Randomized Trial”
Perfect Substitutes
• Goods for which indifference curves a re straight lines are called perfect substitutes.
• Example: 500 won coins and 100 won co ins • Can be modeled with a linear utility function.
Economics concepts
• A closed economy is an economy which does not interact with other economie s outside itself.
• An open economy is an economy which d oes.
The Marginal Rate of Substituti on
• The marginal rate of substitution is the amount of one good that would com pensate for a marginal loss of anothe r good.
Branches of Economics
• Microeconomics is the study of how ho useholds and firms make decisions and how they interact in specific markets .
• Macroeconomics is the study of the ec onomy at the community, national, reg ional, or world level.
Utility Theory
• Utility is the degree of a preference an individual assigns to a state. If situa tion A is preferred to B, we say that A offers a higher utility than B.
Goods and Bads Revisited
• If something is a good, then more of that thing increases utility. • dU/dx >0 implies that x is a good • If something is a bad, then more of t hat thing decreases utility • dU/dx<0 implies that x is a bad
Monotonicity
• g(x) is a monotonic transformation of f(x) if, for all x1 and x2, f(x1) <, =, > f(x2) if and only if g(x1) <, =, > g (x2)
• In other words, monotonic transformat ions are order preserving. • Utility functions are equivalent to m onotonic transformations of themselve s
Marginal utility
• A change on the margin means a very s mall change
ቤተ መጻሕፍቲ ባይዱ
Indifference curves
• An indifference curve is a curve alon g which an individual is indifferent to two different sets of goods.
• A good is something which increases util ity. • A bad is something which decreases utili ty.
Utility notation
Ceteris Paribus
• In real life, a person’s utility is a function of at least thousands of f actors.
Indifference Curve Example
• Suppose the following quantities of loaves o f bread and liters milk all yield a utility of, say, 10: Bread Milk 0 10 1 7 2 5 3 4 6 0 • These points can be sketched out to form an indifference curve.
Assumptions
• Transitivity – If A is preferred to B, and B is preferred to C, then A is preferred to C.
• Continuity – If A is preferred to B, then situations “close to” A are pr eferred to B.
Assumptions
• Completeness – Given any two situati ons, an individual can specify which is preferred to the other, or that sh e is indifferent between the two.
Perfect complements
• Goods for which indifference curves a re right-angled are perfect complemen ts.
• Example: right shoes and left shoes • Can be modeled with a Liontief utilit y function.
Usual Properties of Indifferenc e Curves for Two Goods
• Higher indifference red to lower ones • Indifference curves ing • Indifference curves • Indifference curves inward) curves are prefer
are downward slop do not cross are convex (bowed
Sample Utility Functions
• Cobb-Douglass utility function
• Linear utility function • Leontief Utility function
Example
• Suppose an individual’s utility is a function of rainy days and apples.
– Express this concept mathematically. – Which is likely to be a good and which is likely to be a bad? – Based on what we’ve learned so far, prop ose a utility function which makes sense. – Propose another utility function which is equivalent to this one.
Lesson 1: Utility
Mankiw, pp. 460 – 464
Economics is„
• „the study of the production, distri bution, and consumption of goods and services.
• „the study of the division of finite resources given infinite wants • „a way of mathematically modeling ha ppiness
Monotonicity examples
• Suppose values of y and x must be pos itive. In all of the following, y is a monotonic transformation of x:
–y –y –y –y = = = = 2x x+4 x^2 ln(x)
Recent papers in economics (fro m American Economic Review , Se ptember 2009)
• “Can News about the Future Drive the Bu siness Cycle?” • “Why Do Sellers (Usually) Prefer Auctio ns?” • “Spousal Control and Intra-Household De cision Making: An Experimental Study in the Phillipines”
• Graphically, it is the slope of the i ndifference curve.
Branches of Economics
• Econometrics is the application of st atistics to the study of economic phe nomena
Economics Concepts
• Normative economics is the study of h ow economic systems are. • Positive economics is economic analys is which makes or supports policy rec ommendations
• Economics problems are generally stud ied ceteris paribus, which means “ev erything else being equal”
Assumptions of Utility Theor y
• People are rational – they optimally use all the information they have to maximize utility.