Outline

1.

2.

3.

4.

2.

March 9, 2007

Outline

1.

2.

1.1.
1.2.

2.1.
2.2.

3.1.
3.2.

4.1.
4.2.
4.3.

3.

4.

Outline

1.

2.

3.

4.

X = (x , x , , x )
,
.
:
() .
3

.
(commodity bundle) : n
,

(preference relation)
Outline

1.

2.

3.

4.

A B ,
(strict preference) : A AB
AB .
(weak preference) : A B
A%B A-B .
(indifferent preference) : A B
AB .
A%B and A-B .
(%)
.

(utility function)
Outline

1.

2.

3.

4.

:
.
U : R+n R

U
Z W % Z U(W) U(Z),
.
%
W

Outline

1.

2.

3.

4.

(completeness) : W, Z
.
WZ

WZ

WZ

F, G, H F % G

(continuity) :
.
cf. (lexicographic preference)
(strong monotonicity) : F = (f , , f )
G = (g , , g ) f g i = 1, , n
i s.t. f > g F  G.

.
(transitivity) :
G%H
F % H.

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1.

2.

3.

4.

(ordinal utility) :

. ,
.
(utility surface) : x y
3
, .

Outline

1.

2.

(indifference map) :

3.

4.

(x-y )

.
(indifference
curve) .

.


.
y) = xy U(x,
y) = xy
ex. U(x,
3

(indifference curve)
Outline

1.

2.

3.

4.

:
.

.
.

.
(iv) .
(v) (convex to the origin).

(i)
(ii)
(iii)

(marginal rate of substitution ; MRS) :

.
.
y
MRS =
= | |
x
x, y

Outline

1.

2.

3.

4.

C ,
y
MU y
x
MU x
. U
0 . (
)
0

U = MUx x + MUy y = 0
MRSx, y =

y MUx
=
x MUy

(marginal utility)

MUx (x, y) =

U(x, y)
x

MUy (x, y) =

U(x, y)
y

Outline

1.

2.

3.

4.

(law of diminishing MRS) :

,
.

= .

2

(i)
(ii)
(iii)
(iv)
(v)

(bads)
(neutral goods)
(satiation point, bliss point)

(strictly quasi-concave function)

.
2

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1.

2.

3.

4.


Outline

1.

2.

3.

4.

(budget line) : (M)

. x y
.
px x + py y = M

, (budget set)
(opportunity set) .
x0

y0

px x + py y M

,
.

.

Outline

1.

2.

3.

4.

.
D E
D
E
.

.
MRSx, y =

C, D, E, F
F
.
C

px
MUx
=
MUy
py

(1)

(MRS)

()
.

Outline

1.

2.

(1)

3.

MUy
MUx
=
px
py

4.

(2)

, 1 1
.

.

(corner solution)
(1) .

Outline

1.

2.

3.

4.

(income-consumption curve) :
M1 M2 M3

E E E
,


.
,


(ii)
(Engel curve) .
1

Outline

1.

2.

3.

4.

,
.
1
(ray) .

,
(homothetic preference) .
3

f r (homogeneous function

3
y = f (x1 , , xn )
of degree r)
.

f (kx1 , kx2 , , kxn ) = kr f (x1 , x2 , , xn ),

k>0

1 .

Outline

1.

2.

3.

4.

(price-consumption curve) :

p p p
E E E
,


.
x1

x2

x3

,


(ii)
(demand curve) .

Outline

1.

2.

3.

4.

.
.
(x) 1
x-y .
.
x = xd (px ; py , M)

(p ), (p ), (M)
. , 0
.
x

Outline

1.

2.

3.

4.

. , i
x = x (p ; p , M) x
.
i

d
i

xT (px ) =

m
X

xdi (px )

i=1

p M .
y

Outline

1.

2.

3.

4.

.
(substitution effect),
(income effect) .
(price effect) = +

.

, .
.

Outline

1.

2.

3.

4.

(p p )
( )
( )
.

.
,


.



.
x

0
x

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1.

2.

3.

4.

,


.
( )
( )

(Giffen goods) .
.



.

Outline

1.

2.

3.

4.

.

(compensated
demand curve) .


.
(compensating
variation) .

Outline

1.

2.

3.

4.

,

.



.

dd, d d
,


.
c c

Outline

1.

2.

3.

4.

p , p , E
xp + yp E, x 0, y 0
.
U = U(x, y) .
x = x (p , p , E)

.
(4)
y = y (p , p , E)
x

L(, x, y) = U(x, y) (xpx + ypy E)

= (px , py , E)

(solution)
(interior solution)
1 .

x y
(ordinary demand
function) .

L = xp yp + E = 0

L = U p
=0
(3) .
,
L = U p
=0
(indirect utility function) U ()
2
1 .
(3) , x, y
U (p , p , E) U(x (p , p , E), y (p , p , E))
5

5 x

> 0, y > 0

Outline

1.

2.

U(x, y) = U
E = xpx + ypy
.

3.

4.

p , p , U
.
x

x = xc (px , py , U)
y = yc (px , py , U)

L ( , x, y) = xpx + ypy (U(x, y) U)

1
.

(6)

= (px , py , U)

x y
(compensated demand
function) .
L = U U(x, y) = 0

L =p U =0
(5)
,
L =p U =0
(expenditure function)
2
E () .
1
(5) , x, y
E (p , p , U) p x (p , p , U)+p y (p , p , U)

I
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1.

2.

3.

U(x , x , , x )

E (p , , p , U),

U (p , , p , E) ,
P = (p , , p )
x (P, E)
x (P, U) .

p .
j

n
X
xc
E
= xcj (P, U) +
pk k
pj
pj

n
d
i

c
i

xci (P, U)

k=1

xdi (P, E (P, U)).

= xcj (P, U) +

p
pj

xdi
pj

xdi
E

E
pj

n
X
k=1

xci

E = p1 xc1 (P, U) + + pn xcn (P, U)

4.

=
(7)

xcj (P, U)

Uk

xck
pj

0.)

II
Outline

1.

2.

3.

4.

(7)
i = j

(Slutsky equation) .
x
x
x
6

xdi
pj

xci
pj

xdi
E

d
i

xj

j

) ( )
(
x ) .
i
(

xci
pj

xdi
E

pi

c
i

pi

d
i

xi

,
()


.

Shepards Lemma
. 1

.
6

Outline

1.

1
2
3
4
5

2.

3.

Chapter 4. # 6.
(3pts) Chapter 5. # 5.
(3pts) Chapter 5. # 11.
(3pts) Chapter 5. # 13.
(10pts)
. .
(10pts) 1
.
(20pts) E U(x, y) = x y
. (x y p , p .)
(1) .
, , .
(2)
. ?
(20pts) U(x, y) = min{x, y}
.
(3pts)

4.