北大微观经济学课件(英文版)ch8-Slutsky Equation.ppt

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1、Chapter EightSlutsky EquationSlutsky 方程方程由于课件过大，不能上传，本部分删除了6张关于收入效应和替代效应的几何图形的图片，请读者看教材的相关图形。cym2022/12/21中级微观经济学Effects of a Price ChangeuWhat happens when a commoditys price decreases?Substitution effect(替代效应）替代效应）:the commodity is relatively cheaper,so consumers substitute it for now relatively m

2、ore expensive other commodities.2022/12/21中级微观经济学Effects of a Price ChangeIncome effect（收入效应）收入效应）:the consumers budget of$y can purchase more than before,as if the consumers income rose,with consequent income effects on quantities demanded.2022/12/21中级微观经济学Effects of a Price Changex2x1Original choi

3、ceConsumers budget is$y.2022/12/21中级微观经济学Effects of a Price Changex1Lower price for commodity 1pivots the constraint outwards.Consumers budget is$y.x22022/12/21中级微观经济学Effects of a Price Changex1Lower price for commodity 1pivots the constraint outwards.Consumers budget is$y.x2Now only$y are needed to

4、 buy the original bundle at the new prices,as if the consumers income has increased by$y-$y.2022/12/21中级微观经济学Effects of a Price ChangeuChanges to quantities demanded due to this extra income are the income effect of the price change.2022/12/21中级微观经济学Effects of a Price ChangeuSlutsky discovered that

5、changes to demand from a price change are always the sum of a pure substitution effect and an income effect.2022/12/21中级微观经济学Real Income ChangesuSlutsky asserted that if,at the new prices,less income is needed to buy the original bundle then“real income”is increasedmore income is needed to buy the o

6、riginal bundle then“real income”is decreased2022/12/21中级微观经济学Real Income Changesx1x2Original budget constraint and choice2022/12/21中级微观经济学Real Income Changesx1x2Original budget constraint and choiceNew budget constraint2022/12/21中级微观经济学Real Income Changesx1x2Original budget constraint and choiceNew

7、budget constraint;real income has risen2022/12/21中级微观经济学Real Income Changesx1x2Original budget constraint and choice2022/12/21中级微观经济学Real Income Changesx1x2Original budget constraint and choiceNew budget constraint2022/12/21中级微观经济学Real Income Changesx1x2Original budget constraint and choiceNew budge

8、t constraint;real income has fallen2022/12/21中级微观经济学Pure Substitution EffectuSlutsky isolated the change in demand due only to the change in relative prices by asking“What is the change in demand when the consumers income is adjusted so that,at the new prices,she can only just buy the original bundl

9、e?”uUse WARP to determine the direction of change.2022/12/21中级微观经济学Pure Substitution Effect Onlyx2x1x2x12022/12/21中级微观经济学Pure Substitution Effect Onlyx2x1x2x12022/12/21中级微观经济学Pure Substitution Effect Onlyx2x1x2x12022/12/21中级微观经济学Pure Substitution Effect Onlyx2x1x2x2x1x12022/12/21中级微观经济学Pure Substitu

10、tion Effect Onlyx2x1x2x2x1x1Lower p1 makes good 1 relativelycheaper and causes a substitutionfrom good 2 to good 1.(x1,x2)(x1,x2)is the pure substitution effect.2022/12/21中级微观经济学And Now The Income Effectx2x1x2x2x1x1(x1,x2)2022/12/21中级微观经济学And Now The Income Effectx2x1x2x2x1x1(x1,x2)The income effect

11、 is (x1,x2)(x1,x2).2022/12/21中级微观经济学The Overall Change in Demandx2x1x2x2x1x1(x1,x2)The change to demand due to lower p1 is the sum of the income and substitution effects,(x1,x2)(x1,x2).2022/12/21中级微观经济学Slutskys Effects for Normal GoodsuMost goods are normal(i.e.demand increases with income).uThe sub

12、stitution and income effects reinforce each other when a normal goods own price changes.2022/12/21中级微观经济学Slutskys Effects for Normal Goodsx2x1x2x2x1x1(x1,x2)Good 1 is normal becausehigher income increasesdemand 2022/12/21中级微观经济学x2x1x2x2x1x1(x1,x2)Good 1 is normal becausehigher income increasesdemand

13、,so the income and substitution effects reinforce each other.Slutskys Effects for Normal Goods2022/12/21中级微观经济学uSince both the substitution and income effects increase demand when own-price falls,a normal goods ordinary demand curve slopes down.uThe Law of Downward-Sloping Demand therefore always ap

14、plies to normal goods.Slutskys Effects for Normal Goods2022/12/21中级微观经济学Slutskys Effects for Income-Inferior GoodsuSome goods are income-inferior(i.e.demand is reduced by higher income).uThe substitution and income effects oppose each other when an income-inferior goods own price changes.2022/12/21中

15、级微观经济学Slutskys Effects for Income-Inferior Goodsx2x1x2x12022/12/21中级微观经济学Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x12022/12/21中级微观经济学Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1The pure substitution effect is as fora normal good.But,.2022/12/21中级微观经济学Slutskys Effects for Income-

16、Inferior Goodsx2x1x2x2x1x1(x1,x2)The pure substitution effect is as for a normal good.But,the income effect is in the opposite direction.2022/12/21中级微观经济学Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1(x1,x2)The pure substitution effect is as for a normal good.But,the income effect is in the

17、opposite direction.Good 1 is income-inferior because an increase to income causes demand to fall.2022/12/21中级微观经济学Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1(x1,x2)The overall changes to demand arethe sums of the substitution and income effects.2022/12/21中级微观经济学Giffen GoodsuIn rare cases

18、of extreme income-inferiority,the income effect may be larger in size than the substitution effect,causing quantity demanded to fall as own-price rises.uSuch goods are Giffen goods.2022/12/21中级微观经济学Slutskys Effects for Giffen Goodsx2x1x2x1A decrease in p1 causes quantity demanded of good 1 to fall.2

19、022/12/21中级微观经济学Slutskys Effects for Giffen Goodsx2x1x2x1x1x2A decrease in p1 causes quantity demanded of good 1 to fall.2022/12/21中级微观经济学Slutskys Effects for Giffen Goodsx2x1x2x2x1x1x1x2Substitution effectIncome effectA decrease in p1 causes quantity demanded of good 1 to fall.2022/12/21中级微观经济学Slut

20、skys Effects for Giffen GoodsuSlutskys decomposition of the effect of a price change into a pure substitution effect and an income effect thus explains why the Law of Downward-Sloping Demand is violated for extremely income-inferior goods.2022/12/21中级微观经济学The Slutsky Equation(-)(+)if normal(-)if inf

21、erior(-)(?)2022/12/21中级微观经济学Remaining TopicsuExamples of decompositionPerfect complements preferencesPerfect substitute preferencesQuasi-linear preferencesuApplicationsRebating a taxReal time pricinguHicksian substitution effect2022/12/21中级微观经济学Rebating A TaxuOriginal budget:px+y=muTaxing x and rebate the tax,at optimal consumption(x,y):(p+t)x+y=m+txpx+y=mu(x,y)is on the original budget2022/12/21中级微观经济学Rebate a Tax on Initial ConsumptionuOriginal budget,at optimal consumption(x,y):px*+y*=muTaxing x and rebate the tax tx*,the budget is:(p+t)x+y=m+tx*u(x*,y*)is on the budget 2022/12/21中级微观经济学