中微课件范里安版MicroCh14章节幻灯片.pptVIP

Two additional dollar measures of the total utility change caused by a price change are Compensating Variation and Equivalent Variation. Compensating Variation and Equivalent Variation p1 rises. Q: What is the least extra income that, at the new prices, just restores the consumer’s original utility level? A: The Compensating Variation. Compensating Variation Compensating Variation x2 x1 u1 p1=p1’ p2 is fixed. Compensating Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Compensating Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Compensating Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. CV = m2 - m1. p1 rises. Q: What is the level of reduction in income such that the consumer is indifferent between the original prices with the reduced income and the new prices with the original income? A: The Equivalent Variation. Equivalent Variation p1 rises. Q: What is the level of income reduction such that, the consumer is indifferent between the new price with the old income and the old price with the reduced income? A: The Equivalent Variation. Equivalent Variation Equivalent Variation x2 x1 u1 p1=p1’ p2 is fixed. Equivalent Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. Equivalent Variation x2 x1 u1 u2 p1=p1’p1=p1” p2 is fixed. EV = m1 - m2. Relationship 1: When the consumer’s preferences are quasilinear, all three measures are the same. Consumer’s Surplus, Compensating Variation and Equivalent Variation Consider first the change in Consumer’s Surplus when p1 rises from p1’ to p1”. Consumer’s Surplus, Compensating Variation and Equivalent Variation Consumer’s Surplus, Compensating Variation and Equivalent Variation If then and so the change in CS when p1 risesfrom p1’ to p1” is Now consider the change in CV when p1 rises from p1’ to p1”. The consumer’s utility for given p1 isand CV is the extra income which, at the new prices, makes the consumer’s utility the same as at the old prices. That is, ... Consumer’s Surplus, Compensating Variation and Equivalent