Ch14Consumer’s Surplus(微观-范里安-(上海交通大学,赵旭 ).pptVIP

Chapter Fourteen Consumer’s Surplus Monetary Measures of Gains-to-Trade You can buy as much gasoline as you wish at $1 per gallon once you enter the gasoline market. Q: What is the most you would pay to enter the market? Monetary Measures of Gains-to-Trade A: You would pay up to the dollar value of the gains-to-trade you would enjoy once in the market. How can such gains-to-trade be measured? Monetary Measures of Gains-to-Trade Three such measures are: Consumer’s Surplus Equivalent Variation, and Compensating Variation. Only in one special circumstance do these three measures coincide. $ Equivalent Utility Gains Suppose gasoline can be bought only in lumps of one gallon. Use r1 to denote the most a single consumer would pay for a 1st gallon -- call this her reservation price for the 1st gallon. r1 is the dollar equivalent of the marginal utility of the 1st gallon. $ Equivalent Utility Gains Now that she has one gallon, use r2 to denote the most she would pay for a 2nd gallon -- this is her reservation price for the 2nd gallon. r2 is the dollar equivalent of the marginal utility of the 2nd gallon. $ Equivalent Utility Gains Generally, if she already has n-1 gallons of gasoline then rn denotes the most she will pay for an nth gallon. rn is the dollar equivalent of the marginal utility of the nth gallon. $ Equivalent Utility Gains r1 + … + rn will therefore be the dollar equivalent of the total change to utility from acquiring n gallons of gasoline at a price of $0. So r1 + … + rn - pGn will be the dollar equivalent of the total change to utility from acquiring n gallons of gasoline at a price of $pG each. $ Equivalent Utility Gains A plot of r1, r2, … , rn, … against n is a reservation-price curve. This is not quite the same as the consumer’s demand curve for gasoline. $ Equivalent Utility Gains $ Equivalent Utility Gains What is the monetary value of our consumer’s gain-to-trading in the gasoline market at a price of $pG? $ Equivalent Utility Gains The dolla