范里安——高级微观经济学（课件）ch2 Intermediate Microeconomics.pptVIP

Shapes of Budget Constraints with a Quantity Penalty x2 x1 Budget Set Budget Constraint * Shapes of Budget Constraints - One Price Negative Commodity 1 is stinky garbage. You are paid $2 per unit to accept it; i.e. p1 = - $2. p2 = $1. Income, other than from accepting commodity 1, is m = $10. Then the constraint is - 2x1 + x2 = 10 or x2 = 2x1 + 10. * Shapes of Budget Constraints - One Price Negative 10 Budget constraint’s slope is -p1/p2 = -(-2)/1 = +2 x2 x1 x2 = 2x1 + 10 * Shapes of Budget Constraints - One Price Negative 10 x2 x1 Budget set is all bundles for which x1 3 0,x2 3 0 and x2 ￡ 2x1 + 10. * Budget Constraints - Income Changes Increases in income m shift the constraint outward in a parallel manner, thereby enlarging the budget set and improving choice. Decreases in income m shift the constraint inward in a parallel manner, thereby shrinking the budget set and reducing choice. * Budget Constraints - Income Changes No original choice is lost and new choices are added when income increases, so higher income cannot make a consumer worse off. An income decrease may (typically will) make the consumer worse off. * Budget Constraints - Price Changes What happens if just one price decreases? Suppose p1 decreases. * How do the budget set and budget constraint change as p1 decreases from p1’ to p1”? Original budget set x2 x1 m/p2 m/p1’ m/p1” -p1’/p2 * How do the budget set and budget constraint change as p1 decreases from p1’ to p1”? Original budget set x2 x1 m/p2 m/p1’ m/p1” New affordable choices -p1’/p2 * How do the budget set and budget constraint change as p1 decreases from p1’ to p1”? Original budget set x2 x1 m/p2 m/p1’ m/p1” New affordable choices Budget constraint pivots; slope flattens from -p1’/p2 to -p1”/p2 -p1’/p2 -p1”/p2 * Budget Constraints - Price Changes Reducing the price of one commodity pivots the constraint outward. No old choice is lost and new choices are added, so reducing one price ca