第21讲消费者选择理论曼昆经济学原理第七版.pptVIP

Three Applications Do all demand curves slope downward? Law of demand When the price of a good rises, people buy less of it Downward slope of the demand curve Giffen good An increase in the price of the good raises the quantity demanded Income effect dominates the substitution effect Demand curve – slopes upward * ? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Figure 12 * ? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. A Giffen Good In this example, when the price of potatoes rises, the consumer’s optimum shifts from point C to point E. In this case, the consumer responds to a higher price of potatoes by buying less meat and more potatoes. Quantity of Potatoes Quantity of Meat 0 I1 New budget constraint 1. An increase in the price of potatoes rotates the budget constraint inward . . . 2. . . . which increases potato consumption if potatoes are a Giffen good. Initial budget constraint A D B Optimum with low price of potatoes C I2 Optimum with high price of potatoes E The search for Giffen goods Potatoes - Giffen good during the Irish potato famine of the 19th century Price of potatoes rose Large income effect People – cut back on the luxury of meat Buy more of the staple food of potatoes * ? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The search for Giffen goods Chinese province of Hunan, rice Poor households exhibited Giffen behavior Lo