文档介绍：Chapter Eight
Slutsky Equation
Slutsky 方程
Effects of a Price Change
What happens when modity’s price decreases?
Substitution effect (替代效应): modity is relatively cheaper, so consumers substitute it for now relatively more expensive modities.
Effects of a Price Change
e effect (收入效应): the consumer’s budget of $y can purchase more than before, as if the consumer’s e rose, with consequent e effects on quantities demanded.
Effects of a Price Change
x2
x1
Original choice
Consumer’s budget is $y.
Effects of a Price Change
x1
Lower price modity 1
pivots the constraint outwards.
Consumer’s budget is $y.
x2
Effects of a Price Change
x1
Lower price modity 1
pivots the constraint outwards.
Consumer’s budget is $y.
x2
Now only $y’ are needed to buy the original bundle at the new prices, as if the consumer’s e has increased by $y - $y’.
Effects of a Price Change
Changes to quantities demanded due to this ‘extra’ e are the e effect of the price change.
Effects of a Price Change
Slutsky discovered that changes to demand from a price change are always the sum of a pure substitution effect and an e effect.
Real e Changes
Slutsky asserted that if, at the new prices,
less e is needed to buy the original bundle then “real e” is increased
more e is needed to buy the original bundle then “real e” is decreased
Real e Changes
x1
x2
Original budget constraint and choice