消费者最优选择英文.pptxVIP

Chapter FiveChoice消费者最优选择Where Are We Doing in This Chapter?After modeling a consumer’s choice set and his preference (represented by utility functions), we now put them together and model how he/she makes optimal choice.In mathematical terms, this is a constrained maximization problem;In economics, this is a rational choice problem.Rational Constrained Choicex2More preferredbundlesAffordablebundlesx1Rational Constrained ChoiceThe most preferred affordable bundle is called the consumer’s ORDINARY DEMAND at the given prices and budget.Ordinary demands will be denoted byx1*(p1,p2,m) and x2*(p1,p2,m).Rational Constrained ChoiceWhen x1* 0 and x2* 0 the demanded bundle is INTERIOR.If buying (x1*,x2*) costs $m then the budget is exhausted. Rational Constrained Choicex2(x1*,x2*) is interior.(a) (x1*,x2*) exhausts thebudget; p1x1* + p2x2* = m.x2*x1x1*Rational Constrained Choicex2(x1*,x2*) is interior .(b) The slope of the indiff.curve at (x1*,x2*) equals the slope of the budget constraint.x2*x1x1*Rational Constrained Choice(x1*,x2*) satisfies two conditions: (a) the budget is exhausted; p1x1* + p2x2* = m (b) the slope of the budget constraint, -p1/p2, and the slope of the indifference curve containing (x1*,x2*) are equal at (x1*,x2*).Computing Ordinary Demands - a Cobb-Douglas Example.Suppose that the consumer has Cobb-Douglas preferences.Computing Ordinary Demands - a Cobb-Douglas Example.Suppose that the consumer has Cobb-Douglas preferences.ThenComputing Ordinary Demands - a Cobb-Douglas Example.So the MRS isComputing Ordinary Demands - a Cobb-Douglas Example.So the MRS isAt (x1*,x2*), MRS = -p1/p2 so(A)Computing Ordinary Demands - a Cobb-Douglas Example.(x1*,x2*) also exhausts the budget so(B)Computing Ordinary Demands - a Cobb-Douglas Example.So we have discovered that the mostpreferred affordable bundle for a consumerwith Cobb-Douglas preferencesisComputing Ordinary Demands - a Cobb-Douglas Example.x2x1Rational Constrained ChoiceWhen x1* 0 and x2* 0 and (