《管理经济学》研究生课件IPPTChap004

Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,4/17/2013,‹#›,Chapter 4,The Theory of Individual Behavior,McGraw-Hill/Irwin,Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.,Chapter Outline,Consumer behavior,Constraints,Budget constraint,Changes in income,Changes in prices,Consumer equilibrium,Comparative statics,Price changes and consumer behavior,Income changes and consumer behavior,Income and substitution effects,Applications of indifference curve analysis,Choices by consumers,Choices by workers and managers,Relationship between indifference curves and demand curves,Individual demand,Market demand,4-,2,,Chapter,Overview,Introduction,Chapter 3,focused on,quantitatively measuring demand.,By how much will a 5 percent increase in price reduce quantity demanded?,By how much will a 3 percent decline in income reduce demand for a normal good?,This chapter examines,the theory of consumer behavior that underlies individual and market demand curves.,4-,3,,Chapter,Overview,Consumer Behavior,Consumer opportunities,Set of possible,goods and services consumers can afford to consume.,Consumer preferences,Determine which set goods and services will be consumed.,4-,4,,Consumer Behavior,Properties of Consumer Preferences,Completeness: For any two bundles of goods either:,,.,,.,,.,More is better,If bundle,,has at least as much of every good as bundle,,and more of some good, bundle,,is preferred to bundle,,.,Diminishing marginal rate of substitution,As a consumer obtains more of good X, the amount of good Y the individual is willing to give up to obtain another unit of good X decreases.,Transitivity: For any three bundles,,,,,,, and,,, either:,If,,and,,, then,,.,If,,and,,, then,,.,4-,5,,Consumer Behavior,Constraints,While any decision-making environment faces a host of constraints, the focus of managerial economics is to examine the role prices and income play in constraining consumer behavior.,4-,6,,Constraints,The Budget Constraint,Budget constraint,Restriction set by prices and income that limits bundles of goods affordable to consumers.,Budget set:,,Budget line,,4-,7,,Constraints,The Budget Constraint In Action,4-,8,,Good,,Good,,0,Budget line:,,,,,,,Slope,,Bundle G,,Bundle H,,Budget set:,,Constraints,The Market Rate of Substitution,4-,9,,Good,,Good,,0,Budget line:,,,,,,,,Market rate of substitution :,,Constraints,Income Changes,4-,10,,Good,,Good,,0,,,,,,,Constraints,,,,,Price Changes,4-,11,,Good,,Good,,0,New budget line,,,Initial budget,line,Constraints,,,The Budget Constraint in Action,Consider the following budget line:,,What is the maximum amount of X that can be consumed?,What is the maximum amount of,Y,that can be consumed,?,What is rate at which the market trades goods X and Y?,,4-,12,,Constraints,The Budget Constraint in Action,Answers:,Maximum X is:,,units.,Maximum Y is:,,units.,Market rate of substitution:,,.,4-,13,,Constraints,Consumer Equilibrium,Consumer equilibrium,Consumption bundle that is affordable and yields the greatest satisfaction to the consumer.,Consumption bundle where the rate a,consumer choses,(marginal rate of substitution) to trade between goods X and Y equals the rate at which these goods are traded in the,market,(market rate of substitution).,,,4-,14,,Consumer,Equilibrium,Consumer Equilibrium in Action,4-,15,,Good,,Good,,0,,,Consumer equilibrium,,A,,,B,C,I,II,III,Consumer,Equilibrium,,D,Consumer Equilibrium in Action,Consider the following consumer market information:,,.,,.,Does this information constitute a consumer equilibrium?,No!,Propose a solution to bring the consumer to an equilibrium point.,Trade consumption of X for more Y.,Total utility,can,increase.,4-,16,,Consumer,Equilibrium,Comparative Statics,Price and income changes impact a consumer’s budget set and level of satisfaction that can be achieved.,This implies that price and income changes will lead to consumer equilibrium changes.,This section explores how price and income changes impact consumer equilibrium.,,4-,17,,Comparative Statics,Price Changes and Consumer Equilibrium,Price increases (decreases) reduce (expand) a consumer’s budget set.,The new consumer equilibrium resulting from a price change depends on consumer preferences:,Goods X and Y are:,substitutes,when an increase (decrease) in the price of X leads to an increase (decrease) in the consumption of Y.,complements,when an increase (decrease) in the price of X leads to a decrease (increase) in the consumption of Y.,,4-,18,,Comparative Statics,Price Changes and Consumer Equilibrium in Action,4-,19,,Good,,Good,,0,,,Point A: Initial consumer equilibrium,P,rice of good X decreases:,,,A,B,Point B: New consumer equilibrium,,,,,I,II,Since,,when,,:,Conclude that goods,,and,,are,,substitutes,Comparative Statics,,,,Income Changes and Consumer Equilibrium,Income increases (decreases) reduce (expand) a consumer’s budget set.,The new consumer equilibrium resulting from an income change depends on consumer preferences:,Good X is:,a,normal good,when an increase (decrease) in income leads to an increase (decrease) in the consumption of X.,an,inferior good,when an increase (decrease) in income leads to a decrease (increase) in the consumption of X.,,4-,20,,Comparative Statics,Income Changes and Consumer Equilibrium in Action,4-,21,,Good,,Good,,0,,,A,B,II,I,Point A: Initial consumer equilibrium,Price of income increases:,,Point B: New consumer equilibrium,Since more of both goods are consumed,when,,: Conclude that goods,,,and,,are normal goods.,,,Comparative Statics,,,,Substitutions and Income Effects,Moving from one equilibrium to another when the price of one good changes can be broken down into two effects:,Substitution effect,Income effect,4-,22,,Comparative Statics,Substitution and Income Effects in Action,4-,23,,Good,,Good,,0,,,Point A: Initial consumer equilibrium,P,rice of good X increases:,,C,A,Point B: substitution effect,,,,B,Point C: income effect and new,,consumer equilibrium,,Substitution,effect,Income,effect,,Comparative Statics,I,G,H,F,J,Consumer Choice with a Gift Certificate,4-,24,,Good X,0,,,Point A: Initial consumer equilibrium,Receive a $10 gift certificate for good,,:,,,A,Point B: higher utility holding,,,consumption at initial level,,,II,I,C,Point C: new consumer equilibrium,,when,,and,,are normal,,goods,B,,,,,Good Y,,Applications of Indifference,Curves,Labor-Leisure Choice Model,4-,25,,0,,E,,I,,,,Leisure,(hours per day),Income,(per day),,16 hours of leisure,,8 hours of work,Worker equilibrium,Applications of Indifference,Curves,,,II,III,Labor-Leisure Budget Set in Action,What is the budget set for a worker who receives $7 per hour of work and a fixed payment of $70? Let,,denote the worker’s total earnings and,,the number of leisure hours in a 24-hour day.,,4-,26,,Applications of Indifference,Curves,Indifference and Demand Curves,The indifference curves and consumers’ reactions to changes in prices and income are the basis of the demand functions in chapters 2 and 3.,4-,27,,The Relationship Between,Indifference Curve Analysis and Demand Curves,From Indifference Curves to Individual Demand,4-,28,Good,,Good,,0,,,A,B,,,II,I,Good,,Price of,good,,,,,,Demand,,The Relationship Between,Indifference Curve Analysis and Demand Curves,Good,,0,A,,,Good,,Price of,good,,,,,Demand,mkt,Price of,good,,,B,A,B,A+B,,Demand,B,Demand,A,From Individual to Market Demand,The Relationship Between,Indifference Curve Analysis and Demand Curves,4-,29,Conclusion,Indifference curve properties reveal information about consumers’ preferences between bundles of goods.,Completeness,More is better,Diminishing rate of substitution,Transitivity,Indifference curves along with price changes determine individuals’ demand curves.,Market demand is the horizontal summation of individuals’ demands.,,4-,30,,。