中级微观经济学课件

结构教员与助教要求教学大纲例子:marketforapartmentsWHOAMI?赵耀辉北京大学中国经济研究中心Office:504CCER

Phone:6275-4803Email:yhzhao@

OfficeHours:Wednesdays4:00-5:00pm助教廖志鹏,zpliao@张沈伟，jeswest@赵洪春，zhaohongchun@OfficeHours:Tuesdays4:00-5:00pm教材IntermediateMicroeconomics:AModernApproach(SixthEdition)

byHalR.VarianW.W.Norton，2003作业几乎每次课后都有作业周一的作业在周四课前交周四的作业在周一课前交课后领回作业不交或迟交作业将不得分考试两次测验，一次期中，一次期末注意考试日期测验和期中考试只考阶段内容期末考试将考全部课程内容

除极特殊情况以外，缺考者得零分

没有补考或者缓考成绩家庭作业:20％测验:20％期中考试:20％期末考试:40％

TheTheoryofEconomicsdoesnot

furnishabodyofsettledconclusions

immediatelyapplicabletopolicy.Itis

amethodratherthanadoctrine,an

apparatusofthemind,atechniqueof

thinkingwhichhelpsitspossessorto

drawcorrectconclusions

---JohnMaynardKeynesIsEconomicsUseful?BecomingathinkerChangesthewayyouviewlifeandunderstandproblemsAnallroundmajorEconomicsGraduates

TypeofEmployer%GraduatesTraditionalBusiness23.3Government18.4FinancialBusiness17.7GraduateSchool13.7ConsultingServices4.4Private/publicSchool3.9LawFirm3.5Other9.8JobsforEconomistsBusinesseconomistsGovernmenteconomistsAcademiceconomistsMicroeconomicsTheoryApplicationsLaboreconomicsEconomicsofeducationDevelopmenteconomicsAgriculturaleconomicsIndustrialorganizationsHealtheconomics……CourseOutlineConsumertheory(1-15)Producertheory(18-27)Marketequilibrium(16-17,30-32)SpecialtopicsonequilibriumEconomicModelingWhatcauseswhatineconomicsystems?Whichvariablesaredeterminedoutsidethemodel(exogenous)Whichvariablesaretobedeterminedbythemodel(endogenous)Atwhatlevelofdetailshallwemodelaneconomicphenomenon?ModelingtheApartmentMarketCentralquestion:Howareapartmentrentsdetermined?Suppose(simplifyingassumptions)apartmentsarecloseordistant,butotherwiseidenticaldistantapartmentsrentsareexogenousandknownmanypotentialrentersandlandlords,i.e.,competitivemarketANormativeQuestionWilltheallocationofapartmentsbedesirable?Needtoknow:Whowillrentcloseapartments?Atwhatprice?TwoPrinciplesinEconomicsOptimization:Eachpersontriestochoosethebestalternativeavailabletohimorher.Equilibrium:Marketpriceadjustsuntilquantitydemandedequalsquantitysupplied.ModelingIndividualDemandDiscretecommodity:0or1unitChooseeitherdistantorcloseapartmentCloseapartmentsaremoredesirablebutmoreexpensiveTendtochoosecloseapartmentifDistantapartmentsarealsoexpensive.Higherincome.Decide:Themaximumrentyouarewillingtopayforacloseapartment.ModelingMarketDemandDemand:Supposethemostanyonepersoniswillingtopaytorentacloseapartmentis$500/month.Then p=$500

QD=1.Supposethepricehastodropto$490beforea2ndpersonwouldrent.Then p=$490

QD=2.ModelingApartmentDemandTheloweristherentalratep,thelargeristhequantityofcloseapartmentsdemanded

p

QD

.Thequantitydemandedvs.pricegraphisthemarketdemandcurveforcloseapartments.MarketDemandCurveforApartmentspQDModelingApartmentSupplySupply:Ittakestimetobuildmorecloseapartmentssointhisshort-runthequantityavailableisfixed(atsay100).MarketSupplyCurveforApartmentspQS100CompetitiveMarketEquilibrium“low”rentalprice

quantitydemandedofcloseapartmentsexceedsquantityavailable

pricewillrise.“high”rentalprice

quantitydemandedlessthanquantityavailable

pricewillfall.CompetitiveMarketEquilibriumQuantitydemanded=quantityavailable

pricewillneitherrisenorfallsothemarketisatacompetitiveequilibrium.CompetitiveMarketEquilibriumpQD,QS100CompetitiveMarketEquilibriumpQD,QSpe100CompetitiveMarketEquilibriumpQD,QSpe100Peoplewillingtopaypeforcloseapartmentsgetcloseapartments.CompetitiveMarketEquilibriumpQD,QSpe100Peoplewillingtopaypeforcloseapartmentsgetcloseapartments.Peoplenotwillingtopay

peforcloseapartments

getdistantapartments.CompetitiveMarketEquilibriumQ:Whorentsthecloseapartments?A:Thosemostwillingtopay.Q:Whorentsthedistantapartments?A:Thoseleastwillingtopay.Sothecompetitivemarketallocationisby“willingness-to-pay”.ComparativeStaticsWhatisexogenousinthemodel?priceofdistantapartmentsquantityofcloseapartmentsincomesofpotentialrenters.Whathappensiftheseexogenousvariableschange?ComparativeStaticsSupposethepriceofdistantapartmentrises.Demandforcloseapartmentsincreases(rightwardshift),causingahigherpriceforcloseapartments.MarketEquilibriumpQD,QSpe100MarketEquilibriumpQD,QSpe100HigherdemandMarketEquilibriumpQD,QSpe100Higherdemandcauseshigher

marketprice;samequantity

traded.ComparativeStaticsSupposethereweremorecloseapartments.Supplyisgreater,sothepriceforcloseapartmentsfalls.MarketEquilibriumpQD,QSpe100MarketEquilibriumpQD,QS100HighersupplypeMarketEquilibriumpQD,QSpe100Highersupplycausesa

lowermarketpriceanda

largerquantitytraded.ComparativeStaticsSupposepotentialrenters’incomesrise,increasingtheirwillingness-to-payforcloseapartments.Demandrises(upwardshift),causinghigherpriceforcloseapartments.MarketEquilibriumpQD,QSpe100MarketEquilibriumpQD,QSpe100Higherincomescause

higherwillingness-to-payMarketEquilibriumpQD,QSpe100Higherincomescause

higherwillingness-to-pay,

highermarketprice,and

thesamequantitytraded.

ImperfectlyCompetitiveMarketsAmongstmanypossibilitiesare:amonopolisticlandlordaperfectlydiscriminatorymonopolisticlandlordacompetitivemarketsubjecttorentcontrol.AMonopolisticLandlordWhenthelandlordsetsarentalpricepherentsD(p)apartments.Revenue=pD(p).Revenueislowifp

0RevenueislowifpissohighthatD(p)0.Anintermediatevalueforpmaximizesrevenue.MonopolisticMarketEquilibriumpQDLow

priceLowprice,highquantity

demanded,lowrevenue.MonopolisticMarketEquilibriumpQDHigh

priceHighprice,lowquantity

demanded,lowrevenue.MonopolisticMarketEquilibriumpQDMiddle

priceMiddleprice,mediumquantity

demanded,largerrevenue.MonopolisticMarketEquilibriumpQD,QSMiddle

priceMiddleprice,mediumquantity

demanded,largerrevenue.

Monopolistdoesnotrentallthe

closeapartments.100MonopolisticMarketEquilibriumpQD,QSMiddle

priceMiddleprice,mediumquantity

demanded,largerrevenue.

Monopolistdoesnotrentallthe

closeapartments.100Vacantcloseapartments.PerfectlyDiscriminatoryMonopolisticLandlordImaginethemonopolistkneweveryone’swillingness-to-pay.Charge$500tothemostwilling-to-pay,charge$490tothe2ndmostwilling-to-pay,etc.DiscriminatoryMonopolisticMarketEquilibriumpQD,QS100p1=$5001DiscriminatoryMonopolisticMarketEquilibriumpQD,QS100p1=$500p2=$49012DiscriminatoryMonopolisticMarketEquilibriumpQD,QS100p1=$500p2=$49012p3=$4753DiscriminatoryMonopolisticMarketEquilibriumpQD,QS100p1=$500p2=$49012p3=$4753DiscriminatoryMonopolisticMarketEquilibriumpQD,QS100p1=$500p2=$49012p3=$4753peDiscriminatorymonopolist

chargesthecompetitivemarket

pricetothelastrenter,and

rentsthecompetitivequantity

ofcloseapartments.RentControlLocalgovernmentimposesamaximumlegalprice,pmax<pe,thecompetitiveprice.MarketEquilibriumpQD,QSpe100MarketEquilibriumpQD,QSpe100pmaxMarketEquilibriumpQD,QSpe100pmaxExcessdemandMarketEquilibriumpQD,QSpe100pmaxExcessdemandThe100closeapartmentsarenolongerallocatedby

willingness-to-pay(lottery,lines,

largefamiliesfirst?).WhichMarketOutcomesAreDesirable?Whichisbetter?RentcontrolPerfectcompetitionMonopolyDiscriminatorymonopolyParetoEfficiencyVilfredoPareto;1848-1923.AParetooutcomeallowsno“wastedwelfare”;i.e.theonlywayoneperson’swelfarecanbeimprovedistoloweranotherperson’swelfare.ParetoEfficiencyJillhasanapartment;Jackdoesnot.Jillvaluestheapartmentat$200;Jackwouldpay$400forit.JillcouldsublettheapartmenttoJackfor$300.Bothgain,soitwasParetoinefficientforJilltohavetheapartment.CriterionforParetoEfficiencyAParetoinefficientoutcomemeansthereremainunrealizedmutualgains-to-trade.Anymarketoutcomethatachievesallpossiblegains-to-trademustbeParetoefficient.ParetoEfficiencyCompetitiveequilibrium:allcloseapartmentrentersvaluethematthemarketpricepeormoreallothersvaluecloseapartmentsatlessthanpesonomutuallybeneficialtradesremainsotheoutcomeisParetoefficient.ParetoEfficiencyDiscriminatoryMonopoly:assignmentofapartmentsisthesameaswiththeperfectlycompetitivemarketsothediscriminatorymonopolyoutcomeisalsoParetoefficient.ParetoEfficiencyMonopoly:notallapartmentsareoccupiedsoadistantapartmentrentercouldbeassignedacloseapartmentandhavehigherwelfarewithoutloweringanybodyelse’swelfare.sothemonopolyoutcomeisParetoinefficient.ParetoEfficiencyRentControl:somecloseapartmentsareassignedtorentersvaluingthematbelowthecompetitivepricepesomerentersvaluingacloseapartmentabovepedon’tgetcloseapartmentsParetoinefficientoutcome.HarderQuestionsOvertime,willthesupplyofcloseapartmentsincrease?rentcontroldecreasethesupplyofapartments?amonopolistsupplymoreapartmentsthanacompetitiverentalmarket?TestingHypothesesWhatcauserentstochange?priceofdistantapartmentsincomesofpotentialrentersquantityofcloseapartments.NeedeconometricsChapterTwoBudgetConstraint预算约束StructureDescribebudgetconstraintAlgebraGraphDescribechangesinbudgetconstraintGovernmentprogramsandbudgetconstraintsNon-linearbudgetlinesConsumptionSetsAconsumptionset（消费集）isthecollectionofallphysicallypossibleconsumptionbundles（消费束）totheconsumer.ConsumptionBundleAconsumptionbundlecontainingx1unitsofcommodity1,x2unitsofcommodity2andsoonuptoxnunitsofcommoditynisdenotedbythevector(x1,x2,…,xn).PhysicalConstraintsNon-negative:Consumptionset:X={(x1,…,xn)|x1

³0,…,xn

³0}Youonlyhave24hoursadaySubsistenceneedEtc.BudgetConstraintWhatconstrainsconsumptionchoice?Budgetarytimeotherresourcelimitations.BudgetConstraintsCommoditypricesarep1,p2,…,pn.Q:Whenisabundle(x1,…,xn)affordableatpricesp1,…,pn?A:When

p1x1+…+pnxn

£

m

wheremistheconsumer’s(disposable)income.BudgetConstraintsThebundlesthatareonlyjustaffordableformtheconsumer’sbudgetconstraint.Thisistheset

{(x1,…,xn)|x1³0,…,xn

³0and

p1x1+…+pnxn

=

m}.

BudgetConstraintsTheconsumer’sbudgetset（预算集）isthesetofallaffordablebundles;

B(p1,…,pn,m)=

{(x1,…,xn)|x1

³0,…,xn

³0and

p1x1+…+pnxn

£

m}Thebudgetconstraintistheupperboundaryofthebudgetset.BudgetSetandConstraintforTwoCommoditiesx2x1Budgetconstraintisp1x1+p2x2=m.m/p1m/p2BudgetSetandConstraintforTwoCommoditiesx2x1Budgetconstraintisp1x1+p2x2=m.m/p2m/p1BudgetSetandConstraintforTwoCommoditiesx2x1Budgetconstraintisp1x1+p2x2=m.m/p1Justaffordablem/p2BudgetSetandConstraintforTwoCommoditiesx2x1Budgetconstraintisp1x1+p2x2=m.m/p1JustaffordableNotaffordablem/p2BudgetSetandConstraintforTwoCommoditiesx2x1Budgetconstraintisp1x1+p2x2=m.m/p1AffordableJustaffordableNotaffordablem/p2BudgetSetandConstraintforTwoCommoditiesx2x1Budgetconstraintisp1x1+p2x2=m.m/p1BudgetSet

thecollection

ofallaffordablebundles.m/p2BudgetSetandConstraintforTwoCommoditiesx2x1p1x1+p2x2=misx2=-(p1/p2)x1+m/p2

soslopeis-p1/p2.m/p1BudgetSetm/p2MeaningoftheSlope

Increasingx1by1mustreducex2byp1/p2.Opportunitycostofconsumingx1Or,therateofexchangethatmarketallows.BudgetConstraintsx2x1Slopeis-p1/p2+1-p1/p2BudgetConstraintsx2x1+1-p1/p2Opp.costofanextraunitof

commodity1isp1/p2units

foregoneofcommodity2.BudgetConstraintsx2x1Opp.costofanextraunitof

commodity1isp1/p2units

foregoneofcommodity2.

Opp.costofanextra

unitofcommodity2is

p2/p1unitsforegone

ofcommodity1.-p2/p1+1BudgetSets&Constraints;IncomeandPriceChangesThebudgetconstraintandbudgetsetdependuponpricesandincome.Whathappensaspricesorincomechange?Howdothebudgetsetandbudgetconstraintchangeasincomemincreases?Originalbudgetsetx2x1HigherincomegivesmorechoiceOriginalbudgetsetNewaffordableconsumption

choicesx2x1Originalandnewbudgetconstraintsareparallel(sameslope).Howdothebudgetsetandbudgetconstraintchangeasincomemdecreases?Originalbudgetsetx2x1Howdothebudgetsetandbudgetconstraintchangeasincomemdecreases?x2x1New,smallerbudgetsetConsumptionbundlesthatarenolongeraffordable.Oldandnewconstraintsareparallel.BudgetConstraints-IncomeChangesIncreasesinincomem

shifttheconstraintoutwardinaparallelmanner,therebyenlargingthebudgetsetandimprovingchoice.Decreasesinincomem

shifttheconstraintinwardinaparallelmanner,therebyshrinkingthebudgetsetandreducingchoice.BudgetConstraints-IncomeChangesNooriginalchoiceislostandnewchoicesareaddedwhenincomeincreases,sohigherincomecannotmakeaconsumerworseoff.Anincomedecreasemay(typicallywill)maketheconsumerworseoff.BudgetConstraints-PriceChangesWhathappensifjustonepricedecreases?Supposep1decreases.Howdothebudgetsetandbudgetconstraintchangeasp1

decreasesfromp1’top1”?Originalbudgetsetx2x1m/p2m/p1’m/p1”-p1’/p2Howdothebudgetsetandbudgetconstraintchangeasp1

decreasesfromp1’top1”?Originalbudgetsetx2x1m/p2m/p1’m/p1”Newaffordablechoices-p1’/p2Howdothebudgetsetandbudgetconstraintchangeasp1

decreasesfromp1’top1”?Originalbudgetsetx2x1m/p2m/p1’m/p1”NewaffordablechoicesBudgetconstraintpivots;slopeflattensfrom-p1’/p2to-p1”/p2-p1’/p2-p1”/p2BudgetConstraints-PriceChangesReducingthepriceofonecommoditypivotstheconstraintoutward.Nooldchoiceislostandnewchoicesareadded,soreducingonepricecannotmaketheconsumerworseoff.BudgetConstraints-PriceChangesSimilarly,increasingonepricepivotstheconstraintinwards,reduceschoiceandmay(typicallywill)maketheconsumerworseoff.UniformAdValoremSalesTaxesAnadvaloremsalestax（从价营业税）leviedatarateof5%increasesallpricesby5%,frompto(1+0.05)p=1.05p.Anadvaloremsalestaxleviedatarateoftincreasesallpricesbytpfrompto(1+t)p.Auniformsalestaxisapplieduniformlytoallcommodities.UniformAdValoremSalesTaxesAuniformsalestaxleviedatratetchangestheconstraintfrom

p1x1+p2x2=m

to

(1+t)p1x1+(1+t)p2x2=mUniformAdValoremSalesTaxesAuniformsalestaxleviedatratetchangestheconstraintfrom

p1x1+p2x2=m

to

(1+t)p1x1+(1+t)p2x2=m

i.e.

p1x1+p2x2=m/(1+t).UniformAdValoremSalesTaxesx2x1p1x1+p2x2=mp1x1+p2x2=m/(1+t)UniformAdValoremSalesTaxesx2x1Equivalentincomeloss

isUniformAdValoremSalesTaxesx2x1Auniformadvalorem

salestaxleviedatratet

isequivalenttoanincome

taxleviedatrateTheFoodStampProgramFoodstampsarecouponsthatcanbelegallyexchangedonlyforfood.Howdoesacommodity-specificgiftsuchasafoodstampalterafamily’sbudgetconstraint?TheFoodStampProgramSupposem=$100,pF=$1andthepriceof“othergoods”ispG=$1.“Othergoods”isacompositegood(复合商品)Itsimplifiestheanalysistoa2-goodmodel.Thebudgetconstraintisthen

F+G=100.TheFoodStampProgramGF100100F+G=100:beforestamps.TheFoodStampProgramF+G=100:beforestamps.Budgetsetafter40food

stampsissued.GF10010014040(F-40)+G=100forF

40G=100forF<40TheFoodStampProgramGF100100F+G=100:beforestamps.Budgetsetafter40food

stampsissued.140Thefamily’sbudget

setisenlarged.40(F-40)+G=100forF

40G=100forF<40TheFoodStampProgramWhatiffoodstampscanbetradedonablackmarketfor$0.50each?F+G=100+0.5

(40-F)forF<40(F-40)+G=100forF

40TheFoodStampProgramGF100100F+G=100:beforestamps.Budgetconstraintafter40

foodstampsissued.140120Budgetconstraintwith

blackmarkettrading.40F+G=100+0.5

(40-F)forF<40(F-40)+G=100forF

40TheFoodStampProgramGF100100F+G=100:beforestamps.Budgetconstraintafter40

foodstampsissued.140120Blackmarkettrading

makesthebudget

setlargeragain.40BudgetConstraints-RelativePrices“Numeraire”(记价物)means“unitofaccount”.Thebudgetlinep1x1+p2x2=mCanbeequivalentlyexpressedasSettingp2=1makescommodity2thenumeraireanddefinesallpricesrelativetop2;BudgetConstraints-RelativePricesAnycommoditycanbechosenasthenumerairewithoutchangingthebudgetsetorthebudgetconstraint.Arelativepriceistheratesofexchangeofcommodities2forunitsofcommodity1.ShapesofBudgetConstraintsQ:Whatmakesabudgetconstraintastraightline?A:Astraightlinehasaconstantslopeandtheconstraintis

p1x1+…+pnxn=m

soifpricesareconstantsthenaconstraintisastraightline.ShapesofBudgetConstraintsButwhatifpricesarenotconstants?E.g.bulkbuyingdiscounts,orpricepenaltiesforbuying“toomuch”.Thenconstraintswillbecurved.ShapesofBudgetConstraints-QuantityDiscountsSupposep2isconstantat$1butthatp1=$2for0£x1

£20andp1=$1forx1>20.ShapesofBudgetConstraints-QuantityDiscountsSupposep2isconstantat$1butthatp1=$2for0£x1

£20andp1=$1forx1>20.Thentheconstraint’sslopeis

-2,for0£x1

£20

-p1/p2=

-1,forx1>20{ShapesofBudgetConstraintswithaQuantityDiscountm=$1005010020Slope=-2/1=-2

(p1=2,p2=1)Slope=-1/1=-1

(p1=1,p2=1)80x2x1ShapesofBudgetConstraintswithaQuantityDiscountm=$1005010020Slope=-2/1=-2

(p1=2,p2=1)Slope=-1/1=-1

(p1=1,p2=1)80x2x1BudgetConstraintswithaQuantityDiscountTheconstraintis2x1+x2=mfor0£x1

£202

20+(x1-20)+x2=mforx1>20{ShapesofBudgetConstraintswithaQuantityDiscountm=$100501002080x2x1BudgetSetBudgetConstraintShapesofBudgetConstraintswithaQuantityPenaltyx2x1BudgetSetBudgetConstraintShapesofBudgetConstraints-OnePriceNegativeCommodity1isstinkygarbage.Youarepaid$2perunittoacceptit;i.e.p1=-$2.p2=$1.Income,otherthanfromacceptingcommodity1,ism=$10.Thentheconstraintis

-2x1+x2=10orx2=2x1+10.ShapesofBudgetConstraints-OnePriceNegative10Budgetconstraint’sslopeis-p1/p2=-(-2)/1=+2x2x1x2=2x1+10ShapesofBudgetConstraints-OnePriceNegative10x2x1

Budgetsetis

allbundlesfor

whichx1

³0,

x2

³0andx2

£2x1+10.ChapterThreePreferences偏好StructureDescribepreferencesIndifferencecurves(无差异曲线)Well-behavedpreferencesMarginalrateofsubstitution(边际替代率)RationalityinEconomics

BehavioralPostulate:

Adecisionmakeralwayschoosesitsmostpreferredalternativefromitssetofavailablealternatives.Sotomodelchoicewemustmodeldecision-makers’preferences.PreferenceRelationsComparingtwodifferentconsumptionbundles,xandy:strictpreference(严格偏好):xismorepreferredthanisy(xy).Indifference(无差异):xisexactlyaspreferredasisy(x~y).weakpreference(弱偏好):xisasatleastaspreferredasisy(xy).p~fPreferenceRelationsPreferencerelationsareordinalrelations;i.e.theystateonlytheorderinwhichbundlesarepreferred.PreferenceRelationsxyandyximplyx~y.~f~fPreferenceRelationsxyandyximplyx~y.xyand(notyx)implyxy.~f~f~f~fpAssumptionsaboutPreferenceRelationsCompleteness(完备性):Foranytwobundlesxandyitisalwayspossibletomakethestatementthateither

xy

or

yx.~f~fAssumptionsaboutPreferenceRelationsReflexivity(反身性):Anybundlexisalwaysatleastaspreferredasitself;i.e.

xx.~fAssumptionsaboutPreferenceRelationsTransitivity(传递性):If

xisatleastaspreferredasy,and

yisatleastaspreferredasz,then

xisatleastaspreferredasz;i.e.

xyandyzxz.~f~f~fIndifferenceCurvesTakeareferencebundlex’.Thesetofallbundlesequallypreferredtox’istheindifferencecurvecontainingx’;thesetofallbundlesy~x’.Sinceanindifference“curve”isnotalwaysacurveabetternamemightbeanindifference“set”.IndifferenceCurvesx2x1x”x”’x’~x”~x”’x’IndifferenceCurvesx2x1z

x

yppxyzIndifferenceCurvesx2x1xAllbundlesinI1arestrictlypreferredtoallinI2.yzAllbundlesinI2arestrictlypreferredto

allinI3.I1I2I3x2x1I(x’)xI(x)WP(x),thesetof

bundlesweaklypreferredtox.WeaklyPreferredSet(弱偏好集)WeaklyPreferredSet(弱偏好集)x2x1WP(x),thesetof

bundlesweaklypreferredtox.

WP(x)

includes

I(x).xI(x)StrictlyPreferredSet(严格偏好集)x2x1SP(x),thesetof

bundlesstrictlypreferredtox,

doesnot

includeI(x).xI(x)IndifferenceCurvesCannotIntersect

x2x1xyzI1I2FromI1,x~y.FromI2,x~z.Thereforey~z.ButfromI1andI2weseeyz,a

contradiction.pSlopesofIndifferenceCurvesWhenmoreofacommodityisalwayspreferred,thecommodityisagood.Ifeverycommodityisagoodthenindifferencecurvesarenegativelysloped.SlopesofIndifferenceCurvesBetterWorseGood2Good1Twogoods

anegativelyslopedindifferencecurve.SlopesofIndifferenceCurvesIflessofacommodityisalwayspreferredthenthecommodityisabad.SlopesofIndifferenceCurvesBetterWorseGood2Bad1Onegoodandone

badapositivelyslopedindifferencecurve.ExamplesPerfectsubstitutes(完全替代)Perfectcomplements(完全互补)Satiation(餍足)Discretegoods(离散商品)ExtremeCasesofIndifferenceCurves;PerfectSubstitutesIfaconsumeralwaysregardsunitsofcommodities1and2asequivalent,thenthecommoditiesareperfectsubstitutesandonlythetotalamountofthetwocommoditiesinbundlesdeterminestheirpreferencerank-order.ExtremeCasesofIndifferenceCurves;PerfectSubstitutesx2x1881515Slopesareconstantat-1.I2I1BundlesinI2allhaveatotal

of15unitsandarestrictlypreferredtoallbundlesin

I1,whichhaveatotalof

only8unitsinthem.ExtremeCasesofIndifferenceCurves;PerfectComplementsIfaconsumeralwaysconsumescommodities1and2infixedproportion(e.g.one-to-one),thenthecommoditiesareperfectcomplementsandonlythenumberofpairsofunitsofthetwocommoditiesdeterminesthepreferencerank-orderofbundles.ExtremeCasesofIndifferenceCurves;PerfectComplementsx2x1I145o5959Eachof(5,5),(5,9)and(9,5)contains

5pairssoeachisequallypreferred.

ExtremeCasesofIndifferenceCurves;PerfectComplementsx2x1I2I145o5959Sinceeachof(5,5),(5,9)and(9,5)contains5pairs,eachislesspreferredthanthebundle(9,9)

whichcontains9pairs.

PreferencesExhibitingSatiationAbundlestrictlypreferredtoanyotherisasatiationpointorablisspoint.Whatdoindifferencecurveslooklikeforpreferencesexhibitingsatiation?IndifferenceCurvesExhibitingSatiationx2x1Satiation

(bliss)

pointIndifferenceCurvesExhibitingSatiationx2x1BetterBetterBetterSatiation

(bliss)

pointIndifferenceCurvesExhibitingSatiationx2x1BetterBetterBetterSatiation

(bliss)

pointIndifferenceCurvesforDiscreteCommoditiesAcommodityisinfinitelydivisibleifitcanbeacquiredinanyquantity;e.g.waterorcheese.Acommodityisdiscreteifitcomesinunitlumpsof1,2,3,…andsoon;e.g.aircraft,shipsandrefrigerators.IndifferenceCurvesforDiscreteCommoditiesSupposecommodity2isaninfinitelydivisiblegood(gasoline)whilecommodity1isadiscretegood(aircraft).Whatdoindifference“curves”looklike?IndifferenceCurvesWithaDiscreteGoodGas-olineCar01234Indifference“curves”

arecollectionsof

discretepoints.Well-BehavedPreferencesApreferencerelationis“well-behaved”ifitisMonotonic(单调)

andconvex(凸状).Monotonicity:Moreofanycommodityisalwayspreferred(i.e.nosatiationandeverycommodityisagood).Well-BehavedPreferencesConvexity:Mixturesofbundlesare(atleastweakly)preferredtothebundlesthemselves.E.g.,the50-50mixtureofthebundlesxandyis

z=(0.5)x+(0.5)y.

zisatleastaspreferredasxory.Well-BehavedPreferences--Convexity.x2y2x2+y22x1y1x1+y12xyz=

x+y2isstrictlypreferredtobothxandy.Well-BehavedPr