中级微观课件·范里安版第14章讲义幻灯片.pptVIP

Interpreting Consumer’s Surplus Net benefit of consuming n units of the good: Utility minus expenditure Compensation needed to give up consuming the product. The change to a consumer’s total utility due to a change to p1 is approximately the change in her Consumer’s Surplus. Change in Consumer’s Surplus Consumer’s Surplus p1 p1(x1), the inverse ordinary demand curve for commodity 1 Consumer’s Surplus p1 CS before p1(x1) Consumer’s Surplus p1 CS after p1(x1) Consumer’s Surplus p1 Lost CS p1(x1), inverse ordinary demand curve for commodity 1. Consumer’s Surplus p1 LostCS x1*(p1), the consumer’s ordinary demand curve for commodity 1. measures the loss in Consumer’s Surplus. Two additional dollar measures of the total utility change caused by a price change are Compensating Variation and Equivalent Variation. Compensating Variation and Equivalent Variation p1 rises. Q: What is the least extra income that, at the new prices, just restores the consumer’s original utility level? Compensating Variation p1 rises. Q: What is the least extra income that, at the new prices, just restores the consumer’s original utility level? A: The Compensating Variation. Compensating Variation Compensating Variation x2 x1 u1 p1=p1’ p2 is fixed. Compensating Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Compensating Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Compensating Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. CV = m2 - m1. p1 rises. Q: What is the least extra income that, at the original prices, just restores the consumer’s original utility level? A: The Equivalent Variation. Equivalent Variation Equivalent Variation x2 x1 u1 p1=p1’ p2 is fixed. Equivalent Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Equivalent Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Equivalent Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. EV = m1 - m2. Consumer’s Surplus, Compensating Variation and Equivalent Variation So when the consumer has quasilinearutil