2010北大光华管理学院本科生大一经济学课件3

Chapter5DemandandConsumerBehaviorIntroductionHowareconsumerpreferencesusedtodeterminedemand?Howdoconsumersallocateincometothepurchaseofdifferentgoods?Howdoconsumerswithlimitedincomedecidewhattobuy?ConsumerBehaviorThetheoryofconsumerbehaviorcanbeusedtohelpanswertheseandmanymorequestionsTheoryofconsumerbehavior◦TheexplanationofhowconsumersallocateincometothepurchaseofdifferentgoodsandservicesConsumerBehaviorTherearethreestepsinvolvedinthestudyofconsumerbehavior1.ConsumerPreferences◦Todescribehowandwhypeoplepreferonegoodtoanother2.BudgetConstraints◦PeoplehavelimitedincomesConsumerBehavior3.Givenpreferencesandlimitedincomes,whatamountandtypeofgoodswillbepurchased?◦Whatcombinationofgoodswillconsumersbuytomaximizetheirsatisfaction?MarginalUtilityandConsumerChoiceUtilitydenotessatisfaction,andweassumeconsumersmakeconsumptionchoicestomaximizeutilityMarginalutilitymeasurestheadditionalsatisfactionobtainedfromconsumingoneadditionalunitofagood◦Howmuchhappieristheindividualfromconsumingonemoreunitoffood?MarginalUtility-ExampleThemarginalutilityderivedfromincreasingfrom0to1unitsoffoodmightbe9Increasingfrom1to2mightbe7Increasingfrom2to3mightbe5Observation:MarginalutilityisdiminishingasconsumptionincreasesDiminishingMarginalUtilityTheprincipleofdiminishingmarginalutilitystatesthatasmoreofagoodisconsumed,theadditionalutilitytheconsumergainswillbesmallerandsmallerNotethattotalutilitywillcontinuetoincreasesinceconsumermakeschoicesthatmakethemhappierTheParadoxofValueNothingismoreusefulthanwater;butitwillscarcepurchaseanything.Adiamond,onthecontrary,hasscarceanyvalueinuse;butaverygreatquantityofothergoodsmayfrequentlybehadinexchangeforit.AdamSmithTheWealthofNations,1776ResolvingtheParadoxAsimpleanswer:diamondsareveryscarceandthecostofgettingextraonesishighwhilewaterisrelativelyabundantandcostslittleinmanyareasofworldAdeepone:thetotalutilityfromwaterconsumptiondoesnotdetermineitspriceordemand.Ratherwater’spriceisdeterminedbyitsmarginalutility,bytheusefulnessofthelastglassTheinteractionofsupplyanddiminishingmarginalutilityresolvestheparadoxConsumerPreferencesConsumerpreferencesorutilitiescanberepresentedgraphicallyusingindifferencecurvesIndifferencecurvesrepresentallcombinationsofmarketbasketsthatthepersonisindifferentto◦ApersonwillbeequallysatisfiedwitheitherchoiceIndifferenceCurves:AnExampleMarketBasketUnitsofFoodUnitsofClothingA2030B1050D4020E3040G1020H1040IndifferenceCurves:AnExampleTheconsumerprefersAtoallcombinationsintheyellowbox,whileallthoseinthepinkboxarepreferredtoA.Food1020304010203040Clothing50GAEHBDIndifferenceCurves:AnExamplePointssuchasB&DhavemoreofonegoodbutlessofanothercomparedtoA◦NeedmoreinformationaboutconsumerrankingConsumermaydecidetheyareindifferentbetweenB,AandD◦WecanthenconnectthosepointswithanindifferencecurveIndifferenceCurves:AnExample•IndifferentbetweenpointsB,A,&D•EispreferredtopointsonU1•PointsonU1arepreferredtoH&GFood1020304010203040Clothing50U1GDAEHBIndifferenceCurvesAnymarketbasketlyingnortheastofanindifferencecurveispreferredtoanymarketbasketthatliesontheindifferencecurvePointsonthecurvearepreferredtopointssouthwestofthecurveIndifferenceCurvesIndifferencecurvesslopedownwardtotheright◦Iftheyslopedupward,theywouldviolatetheassumptionthatmoreispreferredtolessSomepointsthathadmoreofbothgoodswouldbeindifferenttoabasketwithlessofbothgoodsIndifferenceCurvesTodescribepreferencesforallcombinationsofgoods/services,wehaveasetofindifferencecurves–anindifferencemap◦EachindifferencecurveinthemapshowsthemarketbasketsamongwhichthepersonisindifferentIndifferenceMapU2U3FoodClothingU1ABDMarketbasketAispreferredtoB.MarketbasketBispreferredtoD.IndifferenceMapsIndifferencemapsgivemoreinformationaboutshapesofindifferencecurves◦IndifferencecurvescannotcrossViolatesassumptionthatmoreisbetter◦Why?Whatifweassumetheycancross?IndifferenceMapsFoodClothing•BispreferredtoD•AisindifferenttoB&D•BmustbeindifferenttoDbutthatcan’tbeifBispreferredtoDU1U1U2U2ABDIndifferenceCurvesTheshapesofindifferencecurvesdescribehowaconsumeriswillingtosubstituteonegoodforanother◦AtoB,giveup6clothingtoget1food◦DtoE,giveup2clothingtoget1foodThemoreclothingandlessfoodapersonhas,themoreclothingtheywillgiveuptogetmorefoodIndifferenceCurvesABDEG-1-611-4-211Observation:Theamountofclothinggivenupfor1unitoffooddecreasesfrom6to1FoodClothing23451246810121416IndifferenceCurvesWemeasurehowapersontradesonegoodforanotherusingthemarginalrateofsubstitution(MRS)◦Itquantifiestheamountofonegoodaconsumerwillgiveuptoobtainmoreofanothergood◦ItismeasuredbytheslopeoftheindifferencecurveMarginalRateofSubstitutionFood23451Clothing246810121416ABDEG-61111-4-2-1MRS=6MRS=2FCMRSMarginalRateofSubstitutionIndifferencecurvesareconvex◦Asmoreofonegoodisconsumed,aconsumerwouldprefertogiveupfewerunitsofasecondgoodtogetadditionalunitsofthefirstoneConsumersgenerallypreferabalancedmarketbasketMarginalRateofSubstitutionTheMRSdecreasesaswemovedowntheindifferencecurve◦Alonganindifferencecurvethereisadiminishingmarginalrateofsubstitution.◦TheMRSwentfrom6