中级微观经济学_Ch4.pptVIP

Chapter 4Utility Structure of Chapter 4 4.1 Cardinal utility （基数效用论） and Ordinal utility （序数效用论） 4.2 Utility function (效用函数）: definition and its ordinal property: positive monotonic transformation （正单调变换） 4.3 Calculation of Marginal utility (MU) and Marginal rate of substitution (MRS) 4.4 Examples of utility functions and their indifference curves 4.1 Cardinal Utility vs. Ordinal Utility Utility is the satisfaction obtained from consuming goods or services. Two theories: Cardinal utility theory and Ordinal utility theory 4.1.1 Cardinal Utility Theory Cardinal Utility Theory: utility is measurable and can be added. Important concepts: total utility (TU) and marginal utility (MU) TU and MU TU: the sum of utility you gain from consuming each unit of product. MU: the gain in utility obtained from consuming an additional unit of good. Diminishing marginal utility: As the consumption of a good increases, MU derived from the consumption decreases. How TU and MU are related to each other? Goods, Bads and Neutrals A good is a commodity unit which increases utility. A bad is a commodity unit which decreases utility. A neutral is a commodity unit which does not change utility. Goods, Bads and Neutrals 4.1.2 Ordinal Utility Theory Utility can only be ranked. Ordinal utility is the ranking of alternatives as first, second, third, and so on. More realistic and less restrictive. The consumer theory is based on ordinal utility theory. 4.2 Utility Function: definition and property A preference relation that is complete, transitive and continuous can be represented by a continuous utility function. Continuity means that small changes to a consumption bundle cause only small changes to the preference level. 4.2.1 Definition of Utility Functions Definition: A real valued function u: X-R is called a utility function that represents a preference relation if for any two consumption bundles x and y x y u(x) ≧ u(y). u(x): A person‘s utili