Chapter 4 Individual and Market Demand Chapter outline Individual Demand >Income and Substitution Effects Market Demand Consumer Surplus >Network Externality(连带外部效应)
Chapter 4 Individual and Market Demand Chapter outline ➢ Individual Demand ➢ Income and Substitution Effects ➢ Market Demand ➢ Consumer Surplus ➢ Network Externality(连带外部效应)
4.1 Individual Demand 4.1.1 Price Changes Price-consumption curve-A curve tracing (the utility- maximizing combinations of two goods as the price of one changes. 4.1.2 Individual Demand Curve Individual demand curve-Curve relating the quantity of a good that a single consumer will buy to its price
4.1 Individual Demand 4.1.1 Price Changes Price-consumption curve-A curve tracing (描绘) the utilitymaximizing combinations of two goods as the price of one changes. 4.1.2 Individual Demand Curve Individual demand curve-Curve relating the quantity of a good that a single consumer will buy to its price
Clothing (units per 6P。+2X4=4Pc+12x1 month) P=2 6 D Price-Consumption Curve 5 Food 12 20 (units per month) a $2.0 1.0 G Demand Curve 0.5 (b) Food 12 20 Effect of Price Changes (units per month)
Clothing (units per month) Food (units per month) 5 Effect of Price Changes Food (units per month) 12 20 6 4 4 12 20 (a) (b) 0.5 1.0 ＄2.0 Demand Curve Price-Consumption Curve U2 U3 U1 A B D E G H 6Pc + 2ⅹ4= 4Pc + 12ⅹ1 Pc= 2
A reduction in the price of food,with income and the price of clothing fixed,causes this consumer to choose a different market basket.In (a),the baskets that maximize utility for various prices of food (point A,$2.0;B,$1.0;D,$0.5)trace out the price-consumption curve.Part(b)gives the demand curve,which relates the price of food to the quantity demanded.(points E,G,and H correspond to points A,B and D,respectively.)
A reduction in the price of food, with income and the price of clothing fixed, causes this consumer to choose a different market basket. In (a), the baskets that maximize utility for various prices of food (point A, ＄2.0; B, ＄1.0; D, ＄0.5) trace out the price-consumption curve. Part (b) gives the demand curve, which relates the price of food to the quantity demanded. (points E, G, and H correspond to points A, B and D, respectively.)
4.1.2 Income Change Income-Consumption Curve 3 Food 16 (a) (units per month) E $1.0 Demand Curve (b 4 10 :16 Food Effect of Income Changes (units per month)
4.1.2 Income Change Clothing (units per month ) Food (units per month) 5 Effect of Income Changes Food (units per month) 10 16 7 3 4 10 16 (a) (b) ＄1.0 Demand Curve Income-Consumption Curve U2 U3 U1 4 E G H A B D D1 D2 D3 Price of Food
An increase in income,with the price of all goods fixed,causes consumer to alter their choices of market baskets In (a),the baskets that maximize consumer satisfaction for various incomes (point A,10;B,20;D,30)trace out the income-consumption curve.the shift to the right of the demand curve in response to the increases in income is shown in part(b).(Points E,G,and H correspond to pointsA,B and D,respectively.)
An increase in income, with the price of all goods fixed, causes consumer to alter their choices of market baskets. In (a), the baskets that maximize consumer satisfaction for various incomes (point A, ＄10; B, ＄20; D, 30) trace out the income-consumption curve. the shift to the right of the demand curve in response to the increases in income is shown in part (b) . (Points E, G, and H correspond to points A, B and D, respectively.)
Income-consumption curve-Curve tracing the utility-maximizing combinations of two goods as a consumer's income changes. 4.1.3 Engel Curves Engel curves-Curves relating the quantity of a good consumed to income,which can be useful for discussions of how consumer expenditures vary with income. Inferior good(劣等品)-A good for which consumption falls as an individual's income rises. Normal good(正常品)-A good for which consumption increases when income rises
Income-consumption curve-Curve tracing the utility-maximizing combinations of two goods as a consumer’s income changes. 4.1.3 Engel Curves Engel curves-Curves relating the quantity of a good consumed to income, which can be useful for discussions of how consumer expenditures vary with income. Inferior good(劣等品)-Agood for which consumption falls as an individual’s income rises. Normal good (正常品)-A good for which consumption increases when income rises
Steak (units per Income-Consumption Curve month) 6 5 Hamburger 10 20 30(units per month) An Inferior Good An increase in a person's income can lead to less consumption of one of the two goods being purchased. Here,Hamburger,though a normal Good between A and B,becomes an inferior good when the income-Consumption Curve bends backward between B and C
Steak (units per month) Hamburger (units per month) 5 10 20 6 4 Income-Consumption Curve U2 U3 U1 30 A B C 5 An increase in a person’s income can lead to less consumption of one of the two goods being purchased. Here, Hamburger, though a normal Good between A and B, becomes an inferior good when the income-Consumption Curve bends backward between B and C. An Inferior Good
Income dollars a b per month) Engel curve Inferior 20 Normal 8 12 16 10 Food(units per month) Hamburger(units per month) Engel Curves Engel curves relate the quantity of a good consumed to income.In (a), food is a normal good and the Engel curve is upward sloping.In(b), however,hamburger is a normal good for income less than $20 per month and an inferior good for income greater than $20 per month
Income (dollars per month) Normal Inferior Hamburger (units per month) 5 10 Engel curve Food (units per month) 4 8 12 16 Engel Curves Engel curves relate the quantity of a good consumed to income.In (a), food is a normal good and the Engel curve is upward sloping. In (b), however, hamburger is a normal good for income less than ＄20 per month and an inferior good for income greater than ＄20 per month. a b 20
4.1.4 Substitutes and Complements Two goods are substitutes if an increase in the price of one leads to an increase in the quantity demanded of the other. In contrast,two goods are complements if an increase in the price of one leads to a decrease in the quantity demanded of the other
❑ Two goods are substitutes if an increase in the price of one leads to an increase in the quantity demanded of the other. In contrast, two goods are complements if an increase in the price of one leads to a decrease in the quantity demanded of the other 4.1.4 Substitutes and Complements