一消费者选择理论回顾First consumer choice theory review.docx

1、一消费者选择理论回顾First consumer choice theory review一、消费者选择理论回顾（First, consumer choice theory review）First, consumer choice theory review1.1 basic structure1.2 consumer preferencesConsumption bundleBundles of consumption (set)A total of two commodities, X, Y, are assumed to be positive commodities (goods,

2、not, bads)Axiom (axioms) or hypothesis(1) non satisfaction (non-satiation)The more the amount of goods you get, the better.So, in any one commodity group, the entire X-Y space is divided into five parts: the mutual exclusion point of a (better-than set) in the set, to set (worse-than set), and the o

3、ther two sets. If there is a no difference set, then it must be located in the two sets (I, IV) and include a points.Note that better than set and difference set contain all boundaries, but not a points.(2) completenessCan be compared to any two commodity groups (22 comparisons)AB, AB, or abIf X and

4、 Y are infinitely divisible, and consumers can compare any two commodity groups, there is a continuous set of indifference sets (indifference set), and the set must be a downward sloping line. asAt the point above, at any point of the indifference curve, the slope is negative. The slope absolute val

5、ue is the marginal rate of substitution (marginal rate of substitution).According to completeness, the X-Y space can be divided into three mutually exclusive sets, namely, no difference set, better set (located at the upper right of the non differential set) and difference set (located in the left l

6、ower of the indifference set).(3) convexity (convexity). Convexity is strictly divided (strong) and lax (weak).Strict convexity: diminishing marginal rate of substitution;Non strict convexity: marginal substitution rate does not increase;(4) differentiability or smoothness (differentiability or smoo

7、thness)(= = marginal rate of substitution)(5) transitivity (transitivity)If ab and bc, then caTransitivity does not allow any intersection of two different indifference curves1.3 indifference curvesImportant properties:Non crossingNot necessarily parallelEvery curve above the right means higher util

8、ity- other thingsComplete substitutePerfect complement1.4 utility function U (X, Y):A numerical representation of a persons preferenceOrdinal utility function and cardinal utility functionMathematical derivation and representation of substitution rate of Editors=+=0=0Sufficient conditions for dimini

9、shing marginal rate of substitution=In the upper form, the slope of the indifference curve is negative. Then if0, 0,0That is, there is no difference curve convex origin; the marginal substitution rate decreases.1.5 budget constraintLet consumers have income I, all for purchasing / consuming X and Y

10、two commodities (goods), and X and Y respectively. beI=X+Y=+=0, =() the slope of the budget constraint line:Another method to deduce the slope of the budget constraint line:I=+Y=, =A comparison between marginal substitution rate and slope of budget constraint line:The former is based on the consumer

11、s personal preferences, the unit X value of how many units of Y; the latter is based on the market price, a unit of X in the market for how many units of YThe budget constraint line moves parallel to the right / left side with the increase / decrease of the revenue I.1.6 consumer equilibriumGiven th

12、e income I, price, and consumer preferences, the curve between a non difference curve and the budget constraint line is the equilibrium point (Figure e). At this point, the utility of the consumer is maximized (given income),He / she has reached the highest indifference curve. At this point=(questio

13、n: what if consumer utility is maximized?Two. The application and extension of consumer demand theoryWhen Y is a bad2.1 negative commodities (bads)Positive goods (goods) can provide utility for people. Negative commodities (bads) only bring negative effects to people (disutility). Microeconomics tex

14、tbooks usually assume that two commodities, X and Y, are positive commodities. However, when we take into account environmental pollution and other issues, that assumption does not apply. Pollutants are a negative commodity for people. We consider the case that X is a positive commodity and Y is a n

15、egative commodity.2.2 consumer preferencesWe can derive the related indifference graph by applying the same axiom of consumer preference as the previous one.(1) non satisfaction (non-satiation):Note that when a commodity is commodity (good), does not meet the consumers love means more goods quantity

16、; but when a commodity is negative when the goods (bad), consumers love the less number of goods. In this way, the X-Y space can be divided into five mutually exclusive sets: point a, better set, difference set, and the other two sets (II, III region), with point a as reference. If there is a no dif

17、ference set, it must be located in these two sets and include the point a (the following)Attention: better than set and difference set, including all of its boundaries (but not a points).(2) completeness (completeness)If X and Y are infinitely divisible, and consumers can compare any two commodity g

18、roups, there is a continuous set of indifference sets that must be an upward line.Below, at any point in the indifference curve, the marginal rate of substitution is: a unit increase in Y consumption must increase the consumption of X (constant utility to enable consumers to make consumers get the c

19、orresponding compensation) (Note: strictly speaking, it should be called marginal compensation rate). According to completeness, the whole X-Y space can be divided into three mutually exclusive sets: no difference set, better set (at the lower right of the non difference set) and difference set (lef

20、t upper of the indifference set)(3) concavity (concavity): strict and lax. Strictly guaranteed decreasing; not strictly guaranteed without increasing.(4) differentiability / smoothness (differentiability/smoothness)(= = marginal rate of substitution)(5) transitivity (transitivity)Ensure that no two

21、curves intersect without difference2.3 indifference curves2.4 other circumstances(1) Y:good; X:badAccording to the same principle, when Y is a positive commodity and X is a negative product, we can deduce the following indifference graph.(2) when both X and Y are negative commodities:(3) we can illu

22、strate all four possible scenarios with a graph:2.5 sufficient conditions for diminishing=0=Since the symbols here are difficult to make a general assumption, we set =0 (i.e., not considered). that=Here, the slope of the indifference curve is positive.If 0. Suppose 0, and 0 (mean Y marginal negative

23、 utility increase), then02.6 budget constraint lineLet I be the income and the price of X and Y respectively. beI=X+YAvailable: =However, since Y is a negative commodity, it is difficult to assume that any person will pay a positive price for consuming a unit of such a commodity. On the contrary, th

24、e market price should be negative, that is, people will be compensated for the consumption of a unit of such goods (0The point a is the total amount of X that can be purchased when I is fully used in X.2.7 consumer equilibriumE point is the equilibrium point of consumers, at which point, the utility of consumers is maximized at this point,=OneLectures on Environmental Economics