《平狄克微观经济学课件(英文)03(1)》-课件设计（公开）.pptVIP

Marginal Utility and Happiness MARGINAL UTILITY AND CONSUMER CHOICE 3.5 A comparison of mean levels of satisfaction with life across income classes in the United States shows that happiness increases with income, but at a diminishing rate. Figure 3.20 Inefficiency of Gasoline Rationing MARGINAL UTILITY AND CONSUMER CHOICE 3.5 When a good is rationed, less is available than consumers would like to buy. Consumers may be worse off. Without gasoline rationing, up to 20,000 gallons of gasoline are available for consumption (at point B). The consumer chooses point C on indifference curve U2, consuming 5000 gallons of gasoline. However, with a limit of 2000 gallons of gasoline under rationing (at point E), the consumer moves to D on the lower indifference curve U1. Figure 3.21 Comparing Gasoline Rationing to the Free Market MARGINAL UTILITY AND CONSUMER CHOICE 3.5 If the price of gasoline in a competitive market is $2.00 per gallon and the maximum consumption of gasoline is 10,000 gallons per year, the woman is better off under rationing (which holds the price at $1.00 per gallon), since she chooses the market basket at point F, which lies below indifference curve U1 (the level of utility achieved under rationing). However, she would prefer a free market if the competitive price were $1.50 per gallon, since she would select market basket G, which lies above indifference curve U1. Figure 3.22 COST-OF-LIVING INDEXES 3.6 Ideal Cost-of-Living Index ● cost-of-living index Ratio of the present cost of a typical bundle of consumer goods and services compared with the cost during a base period. ● ideal cost-of-living index Cost of attaining a given level of utility at current prices relative to the cost of attaining the same utility at base-year prices. COST-OF-LIVING INDEXES 3.6 The initial budget constraint facing Sarah in 1995 is given by line l1; her utility-maximizing combination of food and books is at point A on indifference curve U1. Rachel requires a budget suffici