中级微观经济学讲义5－收入效应和替代效应（更新）.pdf

Chapter 5 INCOME AND SUBSTITUTION EFFECTS By WALTER NICHOLSON Slides prepared by Linda Ghent (Eastern Illinois University) Modified by Huihua NIE (Renmin Unversity of China) www.ChinaES. 1 Logic Ch.3: Preferenceconvex set, utility function, indifference curve Ch.4: Maximization indifference curve and budget constraint, indirect utility function and expenditure function Ch.5/6: Comparative statics income and price, P -X and P -X x y www.ChinaES. 2 Demand Functions • The optimal levels of x ,x ,…,x can be 1 2 n expressed as functions of all prices and income, which is Marshall demand function • Prices and income are exogenous x * = d (p ,p ,…,p ,I) 1 1 1 2 n x* = x(p ,p ,I) y* = y(p ,p ,I) x y x y How about comparative statics? www.ChinaES. 3 Homogeneity • If we were to double all prices and income, the optimal quantities demanded will not change – the budget constraint is unchanged 0 x * = t d (p ,p ,…,p ,I) = d (tp ,tp ,…,tp ,tI) i i 1 2 n i 1 2 n • Individual demand functions are homogeneous of degree zero in all prices and income www.ChinaES. 4 Homogeneity • With a Cobb-Douglas utility function