Tsinghua Micro Ch9 Buying and Selling 《微观经济学》教学教案.ppt

* * Chapter Nine Buying and Selling What Are We Doing in this Chapter? We expand our basic consumer choice framework to include the possibility that consumers can sell something to generate income. Again, in terms of theoretical framework, nothing is new. Endowments 禀赋 The list of resource units with which a consumer starts is his endowment. A consumer’s endowment will be denoted by the vector (omega). Endowments E.g.states that the consumer is endowed with 10 units of good 1 and 2 units of good 2. What is the endowment’s value? For which consumption bundles may it be exchanged? Budget Constraints Revisited So, given p1 and p2, the budget constraint for a consumer with an endowment is The budget set is Budget Constraints Revisited x2 x1 w1 w2 The endowment point is always on the budget constraint. So price changes pivot theconstraint about the endowment point. Budget Constraints Revisited The constraintis That is, the sum of the values of a consumer’s net demands is zero. Net Demands x2 x1 w1 w2 x2* x1* At prices (p1,p2) the consumersells units of good 1 to acquiremore units of good 2. Net Demands x2 x1 x2*=w2 x1*=w1 At prices (p1”,p2”) the consumerconsumes her endowment; netdemands are all zero. Net Demands x2 x1 w1 w2 Price-offer curve contains all theutility-maximizing gross demands for which the endowment can be  exchanged. A Variation of the Theme: Income from Labor A worker is endowed with $m of nonlabor income and R hours of time which can be used for labor or leisure. w = (R,m). Consumption good’s price is pc. w is the wage rate. ? ? Labor Supply The worker’s budget constraint iswhere C, R denote gross demands for the consumption good and for leisure. That is ? ? { { endowment value expenditure Labor Supply C R R ? endowment m ($) Labor Supply C R R ? endowment ? ? m Labor Supply C R R ? endowment ? ? m slope = , the ‘re