中级微观课件·范里安版第2章讲义幻灯片.ppt

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 - 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 cannot make the consumer worse off. Budget Constraints - Price Changes Similarly, increasing one price pivots the constraint inwards, reduces choice and may (typically will) make the consumer worse off. Uniform Ad Valorem Sales Taxes An ad valorem sales tax levied at a rate of 5% increases all prices by 5%, from p to (1+0.05)p = 1.05p. An ad valorem sales tax levied at a rate of t increases all prices by tp from p to (1+t)p. A uniform sales tax is applied uniformly to all commodities. Uniform Ad Valorem Sales Taxes A uniform sales tax levied at rate t changes the constraint from p1x1 + p2x2 = mto (1+t)p1x1 + (1+t)p2x2 = m Uniform Ad Valorem Sales Taxes A uniform sales tax levied at rate t changes the constraint from p1x1 + p2x2 = mto (1+t)p1x1 + (1+t)p2x2 = mi.e. p1x1 + p2x2 = m/(1+t). Uniform Ad Valorem Sales Taxes x2