微观经济学课件：第8章 Slutsky Equation

《微观经济学课件：第8章 Slutsky Equation》由会员分享，可在线阅读，更多相关《微观经济学课件：第8章 Slutsky Equation（46页珍藏版）》请在装配图网上搜索。

1、Chapter EightSlutsky EquationEffects of a Price ChangeuWhat happens when a commoditys price decreases?Substitution effect(替代效应）替代效应）:the commodity is relatively cheaper,so consumers substitute it for now relatively more expensive other commodities.Effects of a Price ChangeIncome effect（收入效应）收入效应）:th

2、e consumers budget of$y can purchase more than before,as if the consumers income rose,with consequent income effects on quantities demanded.Effects of a Price Changex2x1Original choiceConsumers budget is$y.yp2Effects of a Price Changex1Lower price for commodity 1pivots the constraint outwards.Consum

3、ers budget is$y.x2yp2Effects of a Price Changex1Lower price for commodity 1pivots the constraint outwards.Consumers budget is$y.x2yp2yp2Now only$y are needed to buy the original bundle at the new prices,as if the consumers income has increased by$y-$y.Effects of a Price ChangeuChanges to quantities

4、demanded due to this extra income are the income effect of the price change.Effects of a Price ChangeuSlutsky discovered that changes to demand from a price change are always the sum of a pure substitution effect and an income effect.Real Income ChangesuSlutsky asserted that if,at the new prices,les

5、s income is needed to buy the original bundle then“real income”is increasedmore income is needed to buy the original bundle then“real income”is decreasedReal Income Changesx1x2Original budget constraint and choiceReal Income Changesx1x2Original budget constraint and choiceNew budget constraintReal I

6、ncome Changesx1x2Original budget constraint and choiceNew budget constraint;real income has risenReal Income Changesx1x2Original budget constraint and choiceReal Income Changesx1x2Original budget constraint and choiceNew budget constraintReal Income Changesx1x2Original budget constraint and choiceNe

7、w budget constraint;real income has fallenPure Substitution EffectuSlutsky isolated the change in demand due only to the change in relative prices by asking“What is the change in demand when the consumers income is adjusted so that,at the new prices,she can only just buy the original bundle?”uUse WA

8、RPPure Substitution Effect Onlyx2x1x2x1Pure Substitution Effect Onlyx2x1x2x1Pure Substitution Effect Onlyx2x1x2x1Pure Substitution Effect Onlyx2x1x2x2x1x1Pure Substitution Effect Onlyx2x1x2x2x1x1Pure Substitution Effect Onlyx2x1x2x2x1x1Lower p1 makes good 1 relativelycheaper and causes a substitutio

9、nfrom good 2 to good 1.Pure Substitution Effect Onlyx2x1x2x2x1x1Lower p1 makes good 1 relativelycheaper and causes a substitutionfrom good 2 to good 1.(x1,x2)(x1,x2)is the pure substitution effect.And Now The Income Effectx2x1x2x2x1x1(x1,x2)And Now The Income Effectx2x1x2x2x1x1(x1,x2)The income effe

10、ct is (x1,x2)(x1,x2).The Overall Change in Demandx2x1x2x2x1x1(x1,x2)The change to demand due to lower p1 is the sum of the income and substitution effects,(x1,x2)(x1,x2).Slutskys Effects for Normal GoodsuMost goods are normal(i.e.demand increases with income).uThe substitution and income effects rei

11、nforce each other when a normal goods own price changes.Slutskys Effects for Normal Goodsx2x1x2x2x1x1(x1,x2)Good 1 is normal becausehigher income increasesdemand x2x1x2x2x1x1(x1,x2)Good 1 is normal becausehigher income increasesdemand,so the income and substitution effects reinforce each other.Sluts

12、kys Effects for Normal GoodsuSince both the substitution and income effects increase demand when own-price falls,a normal goods ordinary demand curve slopes down.uThe Law of Downward-Sloping Demand therefore always applies to normal goods.Slutskys Effects for Normal GoodsSlutskys Effects for Income-

13、Inferior GoodsuSome goods are income-inferior(i.e.demand is reduced by higher income).uThe substitution and income effects oppose each other when an income-inferior goods own price changes.Slutskys Effects for Income-Inferior Goodsx2x1x2x1Slutskys Effects for Income-Inferior Goodsx2x1x2x1Slutskys Ef

14、fects for Income-Inferior Goodsx2x1x2x1Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1The pure substitution effect is as fora normal good.But,.Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1(x1,x2)The pure substitution effect is as

15、for a normal good.But,the income effect is in the opposite direction.Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1(x1,x2)The pure substitution effect is as for a normal good.But,the income effect is in the opposite direction.Good 1 is income-inferior because an increase to income causes dem

16、and to fall.Slutskys Effects for Income-Inferior Goodsx2x1x2x2x1x1(x1,x2)The overall changes to demand arethe sums of the substitution and income effects.Giffen GoodsuIn rare cases of extreme income-inferiority,the income effect may be larger in size than the substitution effect,causing quantity dem

17、anded to fall as own-price rises.uSuch goods are Giffen goods.Slutskys Effects for Giffen Goodsx2x1x2x1A decrease in p1 causes quantity demanded of good 1 to fall.Slutskys Effects for Giffen Goodsx2x1x2x1x1x2A decrease in p1 causes quantity demanded of good 1 to fall.Slutskys Effects for Giffen Good

18、sx2x1x2x2x1x1x1x2Substitution effectIncome effectA decrease in p1 causes quantity demanded of good 1 to fall.Slutskys Effects for Giffen GoodsuSlutskys decomposition of the effect of a price change into a pure substitution effect and an income effect thus explains why the Law of Downward-Sloping Dem

19、and is violated for extremely income-inferior goods.The Slutsky Equation 11211212112111(,)(,)(,)sx p p mx p p x xx p p mxppm(-)(+)if normal(-)if inferior(-)(?)Remaining TopicsuExamples of decomposition Perfect complements preferences Perfect substitute preferences Quasi-linear preferencesuApplications Rebating a tax Real time pricinguHicksian substitution effect