文档介绍：Lecture 3
Demand Analysis and Uncertainty
Autumn 2007
1
Lecture3,Xinyu,02121010
Topics to be Discussed
Individual Demand
The Effects of Changes in e and Prices
e and Substitution Effects
Market Demand
From Individual to Market work Externalities
Autumn 2007
2
Lecture3,Xinyu,02121010
Topics to be Discussed
Choice Under Uncertainty
Describing Risk
Preferences Toward Risk
Reducing Risk
Autumn 2007
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Lecture3,Xinyu,02121010
Individual Demand
Autumn 2007
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Lecture3,Xinyu,02121010
The Effects of Changes in e and Prices
Price Changes
Using the figures developed in the previous chapter, the impact of a change in the price of food can be illustrated using indifference curves.
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Lecture3,Xinyu,02121010
The Effects of Changes in e and Prices
Food (units
per month)
Clothing
(units per
month)
4
5
6
U2
U3
A
B
D
U1
4
12
20
Three separate
indifference curves
are tangent to
each budget line.
Assume:
I = $20
PC = $2
PF = $2, $1, $.50
10
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Lecture3,Xinyu,02121010
Price-Consumption Curve
The Effects of Changes in e and Prices
Food (units
per month)
Clothing
(units per
month)
4
5
6
U2
U3
A
B
D
U1
4
12
20
The price-consumption
curve traces out the
utility maximizing
market basket for the
various prices for food.
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Lecture3,Xinyu,02121010
The Effects of Changes in e and Prices
Demand Curve
Individual Demand relates
the quantity of a good that
a consumer will buy to the
price of that good.
Food (units
per month)
Price
of Food
H
E
G
$
4
12
20
$
$.50
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Lecture3,Xinyu,02121010
The Effects of Changes in e and Prices
Two Important Properties of Demand Curves
1) The level of utility that can be attained changes as we move along the curve.
2) At every point on the demand curve, the consumer is maximizing utility by satisfying the condition that the MRS of food for clothing equals the ratio of the prices of