中级微观课件·范里安版第4章讲义幻灯片.ppt

Marginal Utilities Marginal means “incremental”. The marginal utility of commodity i is the rate-of-change of total utility as the quantity of commodity i consumed changes; i.e. Marginal Utilities E.g. if U(x1,x2) = x11/2 x22 then Marginal Utilities E.g. if U(x1,x2) = x11/2 x22 then Marginal Utilities E.g. if U(x1,x2) = x11/2 x22 then Marginal Utilities E.g. if U(x1,x2) = x11/2 x22 then Marginal Utilities So, if U(x1,x2) = x11/2 x22 then Marginal Utilities and Marginal Rates-of-Substitution The general equation for an indifference curve is U(x1,x2) o k, a constant.Totally differentiating this identity gives Marginal Utilities and Marginal Rates-of-Substitution rearranged is Marginal Utilities and Marginal Rates-of-Substitution rearranged is And This is the MRS. Marg. Utilities Marg. Rates-of-Substitution; An example Suppose U(x1,x2) = x1x2. Then so Marg. Utilities Marg. Rates-of-Substitution; An example MRS(1,8) = - 8/1 = -8 MRS(6,6) = - 6/6 = -1. x1 x2 8 6 1 6 U = 8 U = 36 U(x1,x2) = x1x2; Marg. Rates-of-Substitution for Quasi-linear Utility Functions A quasi-linear utility function is of the form U(x1,x2) = f(x1) + x2. so Marg. Rates-of-Substitution for Quasi-linear Utility Functions MRS = - f (x1) does not depend upon x2 so the slope of indifference curves for a quasi-linear utility function is constant along any line for which x1 is constant. What does that make the indifference map for a quasi-linear utility function look like? ￠ Marg. Rates-of-Substitution for Quasi-linear Utility Functions x2 x1 Each curve is a vertically shifted copy of the others. MRS is a constantalong any line for which x1 isconstant. MRS =- f(x1’) MRS = -f(x1”) x1’ x1” Monotonic Transformations Marginal Rates-of-Substitution Applying a monotonic transformation to a utility function representing a preference relation simply creates another utility function representing the same preference relation. What happens to marginal rates-of-