中级微观经济学——理论与应用（第10版）（经济学经典教材·双语教学用书） 尼克尔森等 著 0324319681_67665新.ppt

Chapter 3 Individual Demand Curves Demand Functions Knowing person’s preferences and all economic forces that affect choices allows prediction of how much of each good person would choose in face of scarcity Summarizes this information in demand function: representation of how quantity demanded depends on prices, income, and preferences. Demand Function Three elements determine quantity demanded: Prices of X and Y Income (I) Person’s preferences for X and Y. Preferences appear to right of semicolon-- assume that preferences do not change during analysis (static) Changes in Income When income increases and prices remain same, quantity of each good purchased might increase. Shown in Figure 3-1 where increase in income shows as shift of budget line outward from I1 to I2 to I3. Slope of budget lines remain same because prices have not changed . FIGURE 3-1: Effect of Increasing Income on Quantities of X and Y Chosen FIGURE 3-1: Effect of Increasing Income on Quantities of X and Y Chosen FIGURE 3-1: Effect of Increasing Income on Quantities of X and Y Chosen Changes in Income Response to increased income: quantity of X purchased increases from X1 to X2 and X3 while the quantity purchased of Y also increases from Y1 to Y2 to Y3. Income increases allow more consumption, reflected in outward shift in budget constraint. Allows increase in overall utility. Normal Goods Inferior Goods Normal good: bought in greater quantities as income increases Inferior good: bought in smaller quantities as income increases. FIGURE 3-2: Indifference Curve Map Showing Inferiority FIGURE 3-2: Indifference Curve Map Showing Inferiority FIGURE 3-2: Indifference Curve Map Showing Inferiority Changes in Good’s Price Change in price of one good causes both slope and intercept of budget line to change. Change in one good’s price creates new utility-maximizing choice on another indifference curve with a different MRS. Change in quantity demanded of good with price change Substitution Effec