CHAP02 Theoretical Tools of Public Finance 公共金融与 及公共.pptVIP

Equilibrium and Social Welfare 2 . 3 Producer Surplus producer surplus The benefit that producers derive from selling a good, above and beyond the cost of producing that good. Chapter 2 Theoretical Tools of Public Finance ? 2007 Worth Publishers Public Finance and Public Policy, 2/e, Jonathan Gruber Prepared by:FERNANDO QUIJANO, YVONN QUIJANO,KYLE THIEL APARNA SUBRAMANIAN 2 Theoretical Tools of Public Finance ? 2007 Worth Publishers Public Finance and Public Policy, 2/e, Jonathan Gruber Public Finance and Public Policy, 2/e Jonathan Gruber Theoretical Tools of Public Finance 2.4 Welfare Implications of Benefit Reductions: The TANF Example Continued 2.3 Equilibrium and Social Welfare 2.2 Putting the Tools to Work: TANF and Labor Supply Among Single Mothers 2.1 Constrained Utility Maximization Chapter 2 2.5 Conclusion theoretical tools The set of tools designed to understand the mechanics behind economic decision making. empirical tools The set of tools designed to analyze data and answer questions raised by theoretical analysis. Constrained Utility Maximization 2 . 1 utility function A mathematical function representing an individual’s set of preferences, which translates her well-being from different consumption bundles into units that can be compared in order to determine choice. constrained utility maximization The process of maximizing the well-being (utility) of an individual, subject to her resources (budget constraint). models Mathematical or graphical representations of reality. Constrained Utility Maximization 2 . 1 Preferences and Indifference Curves Constrained Utility Maximization 2 . 1 Preferences and Indifference Curves indifference curve A graphical representation of all bundles of goods that make an individual equally well off. Because these bundles have equal utility, an individual is indifferent as to which bundle he consumes. Indifference curves have two essential properties, both of which follow naturally from the more-is-better assu