中微课件范里安版MicroCh6章节幻灯片.pptVIP

Income Changes and Perfectly-Substitutable Preferences Income Changes and Perfectly-Substitutable Preferences Suppose p1 p2. Then and and Income Changes and Perfectly-Substitutable Preferences y y x1* x2* 0 Engel curvefor good 1 Engel curvefor good 2 Income Changes In every example so far the Engel curves have all been straight lines?Q: Is this true in general? A: No. Engel curves are straight lines if the consumer’s preferences are homothetic. Homotheticity A consumer’s preferences are homothetic if and only iffor every k 0. That is, the consumer’s MRS is the same anywhere on a straight line drawn from the origin. ? (x1,x2) (y1,y2) (kx1,kx2) (ky1,ky2) p p Income Effects -- A Nonhomothetic Example Quasilinear preferences are not homothetic. For example, Income Changes; Quasilinear Utility x2 x1 x1 ~ x1* x2* y y x1 ~ Engelcurve forgood 2 Engelcurve forgood 1 Income Effects A good for which quantity demanded rises with income is called normal. Therefore a normal good’s Engel curve is positively sloped. Income Effects A good for which quantity demanded falls as income increases is called income inferior. Therefore an income inferior good’s Engel curve is negatively sloped. Income Changes; Goods1 2 Normal x1’’’ x1’’ x1’ x2’’’ x2’’ x2’ Incomeoffer curve x1* x2* y y x1’’’ x1’’ x1’ x2’’’ x2’’ x2’ y’ y’’ y’’’ y’ y’’ y’’’ Engelcurve; good 2 Engelcurve; good 1 Income Changes; Good 2 Is Normal, Good 1 Becomes Income Inferior x2 x1 x1* x2* y y Engel curvefor good 2 Engel curvefor good 1 Ordinary Goods A good is called ordinary if the quantity demanded of it always increases as its own price decreases. Ordinary Goods Fixed p2 and y. x1 x2 p1 price offer curve x1* Downward-sloping  demand curve Good 1 isordinary ? p1 Giffen Goods If, for some values of its own price, the quantity demanded of a good rises as its own-price increases then the good is called Giffen. Ordinary Goods Fixed p2 and y. x1 x2 Ordinary Goods Fixed