中级微观经济学课件14.pdfVIP

Chapter 14 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 • r + … + r will therefore be the dollar 1 n equivalent of the total change to utility from acquiring n gallons of gasoline at a price of $0. • So r + … + r - p n will be the dollar 1 n G equivalent of the total change to utility from acquiring n gallons of gasoline at a price of $pG each. $ Equivalent Uti