Pricing with Market Power教程文件.ppt

Chapter 1 1 1 2 8 9 10 11 12 13 15 17 18 20 21 24 26 32 29 32 33 34 35 36 38 40 69 112 72 73 74 76 79 83 84 85 87 88 89 90 91 92 93 93 94 95 96 98 100 102 103 104 105 106 107 110 144 145 13 15 16 23 24 25 26 27 30 33 33 34 34 35 36 36 36 36 36 36 36 46 50 54 56 57 58 63 64 65 65 Budget Constraints Food (units per week) Clothing (units per week) 80 120 160 40 20 40 60 80 0 A increase in income shifts the budget line outward (I = $160) L2 (I = $80) L1 L3 (I = $40) A decrease in income shifts the budget line inward Budget Constraints The Effects of Changes in Income and Prices Price Changes If the price of one good increases, the budget line shifts inward, pivoting from the other good’s intercept. If the price of one good decreases, the budget line shifts outward, pivoting from the other good’s intercept. Budget Constraints Food (units per week) Clothing (units per week) 80 120 160 40 40 (PF = 1) L1 An increase in the price of food to $2.00 changes the slope of the budget line and rotates it inward. L3 (PF = 2) (PF = 1/2) L2 A decrease in the price of food to $.50 changes the slope of the budget line and rotates it outward. Budget Constraints The Effects of Changes in Income and Prices Price Changes If the two goods increase in price, but the ratio of the two prices is unchanged, the slope will not change. However, the budget line will shift inward to a point parallel to the original budget line. Budget Constraints The Effects of Changes in Income and Prices Price Changes If the two goods decrease in price, but the ratio of the two prices is unchanged, the slope will not change. However, the budget line will shift outward to a point parallel to the original budget line. Consumer Choice Consumers choose a combination of goods that will maximize the satisfaction they can achieve, given the limited budget available to them. Consumer Choice The maximizing market basket must satisfy two conditions: 1) It must be located on the budget line. 2) Must give the consumer the