微观经济学原理曼昆英文第七章

Consumers,Producers,

andtheEfficiencyofMarketsEconomicsPRINCIPLESOFN.GregoryMankiw7Inthischapter,

lookfortheanswerstothesequestions:Whatisconsumersurplus?Howisitrelatedtothedemandcurve?Whatisproducersurplus?Howisitrelatedtothesupplycurve?Domarketsproduceadesirableallocationofresources?Orcouldthemarketoutcomebeimprovedupon?1.WelfareEconomicsRecall,theallocationofresourcesrefersto:howmuchofeachgoodisproducedwhichproducersproduceitwhichconsumersconsumeitWelfareeconomicsstudieshowtheallocationofresourcesaffectseconomicwell-being.First,welookatthewell-beingofconsumers.2.WillingnesstoPay(WTP)Abuyer’swillingnesstopayforagoodisthemaximumamountthebuyerwillpayforthatgood.WTPmeasureshowmuchthebuyervaluesthegood.nameWTPAnthony$250Chad175Flea300John125Example:

4buyers’WTP

foraniPod3.WTPandtheDemandCurveQ:

IfpriceofiPodis$200,whowillbuyaniPod,andwhatisquantitydemanded?A: Anthony&FleawillbuyaniPod,Chad&Johnwillnot. Hence,Qd=2

whenP=$200.nameWTPAnthony$250Chad175Flea300John1254.WTPandtheDemandCurveDerivethedemandschedule:4John,Chad,

Anthony,Flea0–1253Chad,Anthony,

Flea126–1752Anthony,Flea176–2501Flea251–3000nobody$301&upQdwhobuysP(price

ofiPod)nameWTPAnthony$250Chad175Flea300John1255.WTPandtheDemandCurvePQd$301&up0251–3001176–2502126–17530–1254PQ6.AbouttheStaircaseShape…ThisDcurvelookslikeastaircase

with4steps–oneperbuyer.PQIftherewereahuge#ofbuyers,asinacompetitivemarket,therewouldbeahuge#

ofverytinysteps,anditwouldlookmorelikeasmoothcurve.7.WTPandtheDemandCurveAtanyQ,

theheightof

theDcurveistheWTPofthemarginalbuyer,thebuyerwhowouldleavethemarketifPwereanyhigher.PQFlea’sWTPAnthony’sWTPChad’sWTPJohn’s

WTP8.ConsumerSurplus(CS)Consumersurplusistheamountabuyeriswillingtopayminustheamountthebuyeractuallypays: CS=WTP–PnameWTPAnthony$250Chad175Flea300John125SupposeP=$260.Flea’sCS=$300–260=$40.TheothersgetnoCSbecausetheydonotbuyaniPodatthisprice.TotalCS=$40.9.CSandtheDemandCurvePQFlea’sWTPP=$260Flea’sCS=

$300–260=$40TotalCS=$4010.CSandtheDemandCurvePQFlea’sWTPAnthony’sWTPInstead,suppose

P=$220Flea’sCS=

$300–220=$80Anthony’sCS=

$250–220=$30TotalCS=$11011.CSandtheDemandCurvePQThelesson:TotalCSequalstheareaunder

thedemandcurveabovetheprice,from0toQ.12.PQ$CSwithLotsofBuyers&aSmoothDCurveThedemandforshoesD1000sofpairsofshoesPrice

perpairAtQ=5(thousand),themarginalbuyeriswillingtopay$50forpairofshoes.SupposeP=$30.Thenhisconsumersurplus=$20.13.PQCSwithLotsofBuyers&aSmoothDCurveThedemandforshoesDCSistheareab/wPandtheDcurve,from0toQ.Recall:areaof

atriangleequals

½xbasexheightHeight=

$60–30=$30.So,

CS=½x15x$30

=$225.h$14.PQHowaHigherPriceReducesCSDIfPrisesto$40,CS=½x10x$20

=$100.TworeasonsforthefallinCS.1. FallinCS

duetobuyersleavingmarket2. FallinCSduetoremainingbuyers

payinghigherP15.16PQdemandcurveA.

Findmarginalbuyer’sWTPat

Q=10.B.

FindCSfor

P=$30.SupposePfallsto$20.

HowmuchwillCSincreasedueto…C.

buyersentering

themarketD.

existingbuyerspayinglowerprice$ACTIVELEARNING1

Consumersurplus.CostandtheSupplyCurvenamecostJack$10Janet20Chrissy35Asellerwillproduceandsellthegood/serviceonlyifthe

priceexceedshisorhercost.Hence,costisameasureofwillingnesstosell.Costisthevalueofeverythingasellermustgiveuptoproduceagood(i.e.,opportunitycost).Includescostofallresourcesusedtoproducegood,includingvalueoftheseller’stime.Example:Costsof3sellersinthelawn-cuttingbusiness.17.CostandtheSupplyCurve335&up220–34110–190$0–9QsPDerivethesupplyschedulefromthecostdata:namecostJack$10Janet20Chrissy3518.CostandtheSupplyCurvePQPQs$0–9010–19120–34235&up319.CostandtheSupplyCurvePQAteachQ,

theheightof

theScurve

isthecostofthemarginalseller,

thesellerwhowouldleave

themarketif

thepricewereanylower.Chrissy’s

costJanet’scostJack’scost20.ProducerSurplusPQProducersurplus(PS):theamountaseller

ispaidforagood

minustheseller’scostPS=P–cost21.ProducerSurplusandtheSCurvePQPS=P–costSupposeP=$25.Jack’sPS=$15Janet’sPS=$5Chrissy’sPS=$0TotalPS=$20Janet’scostJack’scostTotalPSequalstheareaabovethesupplycurveundertheprice,from0toQ.Chrissy’s

cost22.PQPSwithLotsofSellers&aSmoothSCurveThesupplyofshoesS1000sofpairsofshoesPrice

perpairSupposeP=$40.AtQ=15(thousand),themarginalseller’scostis$30,andherproducersurplusis$10.23.PQPSwithLotsofSellers&aSmoothSCurveThesupplyofshoesSPSistheareab/w

PandtheScurve,from0toQ.Theheightofthistriangleis

$40–15=$25.So,

PS=½xbxh

=½x25x$25

=$312.50h24.PQHowaLowerPriceReducesPSIfPfallsto$30,PS=½x15x$15

=$112.50TworeasonsforthefallinPS.S1. FallinPS

duetosellersleavingmarket2. FallinPSduetoremainingsellers

gettinglowerP25.PQsupplycurveA.

Findmarginal

seller’scost

atQ=10.B.

FindtotalPSfor

P=$20.SupposePrisesto$30.

Findtheincrease

inPSdueto…C.

selling5

additionalunitsD.

gettingahigherpriceontheinitial10units26ACTIVELEARNING2

Producersurplus.CS,PS,andTotalSurplusCS=(valuetobuyers)–(amountpaidbybuyers) = buyers’gainsfromparticipatinginthemarketPS=(amountreceivedbysellers)–(costtosellers) =sellers’gainsfromparticipatinginthemarketTotalsurplus=CS+PS =totalgainsfromtradeinamarket =(valuetobuyers)–(costtosellers)27.TheMarket’sAllocationofResourcesInamarketeconomy,theallocationofresources

isdecentralized,determinedbytheinteractions

ofmanyself-interestedbuyersandsellers.Isthemarket’sallocationofresourcesdesirable?Orwouldadifferentallocationofresourcesmakesocietybetteroff?Toanswerthis,weusetotalsurplusasameasureofsociety’swell-being,andweconsiderwhetherthemarket’sallocationisefficient. (Policymakersalsocareaboutequality,thougharefocushereisonefficiency.)28.EfficiencyAnallocationofresourcesisefficientifitmaximizestotalsurplus.Efficiencymeans:Thegoodsareconsumedbythebuyerswhovaluethemmosthighly.Thegoodsareproducedbytheproducerswiththelowestcosts.Raisingorloweringthequantityofagood

wouldnotincreasetotalsurplus.=(valuetobuyers)–(costtosellers)Total

surplus29.EvaluatingtheMarketEquilibriumMarketeq’m:

P=$30

Q=15,000Totalsurplus

=CS+PSIsthemarketeq’mefficient?PQSDCSPS30.WhichBuyersConsumetheGood?PQSDEverybuyer

whoseWTPis

≥$30willbuy.Everybuyer

whoseWTPis

<$30willnot.So,thebuyerswhovaluethegoodmosthighlyaretheoneswhoconsumeit.

31.WhichSellersProducetheGood?PQSDEverysellerwhosecostis≤$30willproducethegood.Everysellerwhosecostis>$30willnot.So,thesellerswiththelowestcostproducethegood.32.DoesEq’mQMaximizeTotalSurplus?PQSDAtQ=20,

costofproducing

themarginalunit

is$35valuetoconsumers

ofthemarginalunit

isonly$20Hence,canincreasetotalsurplus

byreducingQ.ThisistrueatanyQgreaterthan15.33.DoesEq’mQMaximizeTotalSurplus?PQSDAtQ=10,

costofproducing

themarginalunit

is$25valuetoconsumers

ofthemarginalunit

is$40Hence,canincreasetotalsurplus

byincreasingQ.ThisistrueatanyQlessthan15.34.DoesEq’mQMaximizeTotalSurplus?PQSDThemarket

eq’mquantitymaximizes

totalsurplus:

Atanyotherquantity,

canincrease

totalsurplusbymovingtoward

themarketeq’mquantity.35.AdamSmithandtheInvisibleHand“Manhasalmostconstantoccasionforthehelpofhisbrethren,anditisvainforhimtoexpectitfromtheirbenevolenceonly.AdamSmith,

1723-1790PassagesfromTheWealthofNations,1776Hewillbemorelikelytoprevailifhecaninteresttheirself-loveinhisfavor,andshowthemthatitisfortheirownadvantagetodoforhimwhatherequiresofthem…Itisnotfromthebenevolenceofthebutcher,thebrewer,orthebakerthatweexpectourdinner,butfromtheirregardtotheirowninterest….36.AdamSmithandtheInvisibleHand“Everyindividual…neitherintendstopromotethepublicinterest,norknowshowmuchheispromotingit….AdamSmith,

1723-1790PassagesfromTheWealthofNations,1776Heintendsonlyhisowngain,andheisinthis,asinmanyothercases,ledbyaninvisiblehandtopromoteanendwhichwasnopartofhisintention.Norisitalwaystheworseforthesocietythatitwasnopartofit.Bypursuinghisowninteresthefrequentlypromotes

thatofthesocietymoreeffectuallythanwhenhereallyintendstopromoteit.”aninvisiblehand37.TheFreeMarketvs.GovtInterventionThemarketequilibriumisefficient.Nootheroutcomeachieveshighertotalsurplus.Govtcannotraisetotalsurplusbychangingthemarket’sallocationofresources.Laissezfaire(Frenchfor“allowthemtodo”):

thenotionthatgovtshouldnotinterferewiththemarket.38.Thefreemarketvs.centralplanningSupposeresourceswereallocatednotbythemarket,butbyacentralplannerwhocaresaboutsociety’swell-being. Toallocateresourcesefficientlyandmaximizetotalsurplus,theplannerwouldneedtoknoweveryseller’scostandeverybuyer’sWTPforeverygoodintheentireeconomy.Thisisimpossible,andwhycentrally-plannedeconomiesareneververyefficient.39.CONCLUSIONThischapterusedwelfareeconomicstodemonstrateoneoftheTenPrinciples:

Marketsareusuallyagoodwayto

organizeeconomicactivity.Importantnote:

Wederivedtheselessonsassuming

perfectlycompetitivemarkets.Inotherconditionswewillstudyinlaterchapters,themarketmayfailtoallocateresourcesefficiently…40.CONCLUSIONSuchmarketfailuresoccurwhen:abuyerorsellerhasmarketpower–theabilitytoaffectthemarketprice.transactionshavesideeffects,calledexternalities,thataffectbystanders.(example:pollution)We’llusewelfareeconomicstoseehowpublicpolicymayimproveo