微觀經(jīng)濟(jì)學(xué)Microeconomics英文課件 03 Preferences

Chapter3PreferencesCourse:MicroeconomicsText:Varian’sIntermediateMicroeconomics

1IntroductionLastchapterwetalkaboutwhatisaffordableorfeasibletoconsumers.Thistimewetalkaboutpreferences:whattheconsumerlikemoreandwhattheylikeless.Asarationalagent,aconsumerchoosestheoptioninthebudgetsetthatishighestintheirpreferenceorder(i.e.onelikesthemost).2PreferenceRelationsLetx,yareconsumptionbundles.denotesstrictpreferenceso

xymeansthatbundlexispreferredstrictlytobundley.~denotesindifference;x~ymeansxandyareequallypreferred.denotesweakpreference;

xymeansxispreferredatleastasmuchasisy.

~fpp~f3PreferenceRelationsStrictpreference,weakpreferenceandindifferenceareallpreferencerelations.Particularly,theyareordinalrelations;i.e.theystateonlytheorderinwhichbundlesarepreferred.Ithasnoindicationofhowmuchtheylikeoneversustheother.4PreferenceRelationsxyandyximplyx~y.xyand(notyx)implyxy.~f~f~f~fp5AssumptionsaboutPreferenceRelationsCompleteness:Foranytwobundlesxandyitisalwayspossibletomakethestatementthateither

xy

or

yx.Bundlesarealwayscomparable.Ifbotharetrue,thentheyareindifferenttotheindividual.~f~f6AssumptionsaboutPreferenceRelationsReflexivity:Anybundlexisalwaysatleastaspreferredasitself;i.e.

xx.~f7AssumptionsaboutPreferenceRelationsTransitivity:If

xisatleastaspreferredasy,and

yisatleastaspreferredasz,then

xisatleastaspreferredasz;i.e.

xyandyzxz.Itavoidscircularpreference,andensurethatthereexiststhebestbundle.~f~f~f8IndifferenceCurvesTakeareferencebundlex’.Thesetofallbundlesequallypreferredtox’istheindifferencecurve(set)containingx’;thesetofallbundles{y:y~x’}.Weaklypreferredset:bundlesthatareweaklypreferredtox’.{y:yx’}.~f9IndifferenceCurvesx2x1x〞x〞’x’~x〞~x〞’x’Theconsumerisindifferentbetweeneverypointontheindifferencecurve.10IndifferenceCurvesx2x1z

x

yppxyzIfconsumerprefersmoretolessforeachgoods,allbundlesonthenortheastoftheindifferencecurvearestrictlypreferredtox,andallbundlessouthwestoftheindifferencecurvearelesspreferredtox.11IndifferenceCurvesx2x1xAllbundlesinI1arestrictlypreferredtoallinI2.yzAllbundlesinI2arestrictlypreferredtoallinI3.I1I2I312IndifferenceCurvesx2x1I(x’)xI(x)WP(x),thesetof

bundlesweaklypreferredtox.13IndifferenceCurvesx2x1WP(x),thesetof

bundlesweaklypreferredtox.WP(x)

includes

I(x).xI(x)14IndifferenceCurvesx2x1SP(x),thesetof

bundlesstrictlypreferredtox,

doesnot

includeI(x).xI(x)15IndifferenceCurvesCannotIntersect

x2x1xyzI1I2FromI1,x~y.FromI2,x~z.Thereforey~z.ButbecauseI1andI2representdistinctlevelofpreference,wesee

yz,acontradiction.p16GoodsWhenmoreofacommodityisalwayspreferred,thecommodityisagood.Ifeverycommodityisagoodthenindifferencecurvesarenegativelysloped.Itisbecausewhenonehasmoreofonegood,onehastogetlessofanothertomakethisbundleindifferenttotheoriginalone.17SlopesofIndifferenceCurvesBetterWorseGood2Good1Twogoods

anegativelyslopedindifferencecurve.18BadsIflessofacommodityisalwayspreferredthenthecommodityisabad.e.g.rottenfruits;tobaccosmoke(ifyoudonotsmoke)Ifonegoodisgoodandtheotherisbad,thentheindifferencecurvewouldbeupwardsloping.19SlopesofIndifferenceCurvesBetterWorseGood2Bad1Onegoodandone

badapositivelyslopedindifferencecurve.Ifyouwantmoreofthegood,youalsohavetogetmoreofthebadsothatyouareindifferentbetweenthem.20NeutralsIfonejustdonotcareaboutwhetherorhowmuchtohaveacommodity,thisiscalledaneutralgood.E.g.:goodsthatyoudon’tuseanddonotcareabouttheirexistence.Ifonecommodityisneutral,theotherisgood,theindifferencecurvewouldbevertical/horizontal.21SlopeofIndifferenceCurve22ExtremeCasesofIndifferenceCurves;PerfectSubstitutesIfaconsumeralwaysregardsunitsofcommodities1and2asequivalent,thenthecommoditiesareperfectsubstitutes.Onlythetotalamount(oraweightedsum)ofthetwocommoditiesinbundlesdeterminestheirpreferencerank-order.Example:orangejuiceoftwodifferentbrands.Apartmentindifferentlocations.23ExtremeCasesofIndifferenceCurves;PerfectSubstitutesx2x1881515Slopesareconstantat-1.I2I1BundlesinI2allhaveatotal

of15unitsandarestrictlypreferredtoallbundlesin

I1,whichhaveatotalof

only8unitsinthem.24ExtremeCasesofIndifferenceCurves;PerfectComplementsIfaconsumeralwaysconsumescommodities1and2infixedproportion(e.g.one-to-one),thenthecommoditiesareperfectcomplements.Onlythenumberofpairsofunitsofthetwocommoditiesdeterminesthepreferencerank-orderofbundles.E.g.:leftshoes/rightshoes;computerandmonitor.25ExtremeCasesofIndifferenceCurves;PerfectComplementsx2x1I145o5959Eachof(5,5),(5,9)and(9,5)contains

5pairssoeachisequallypreferred.

26ExtremeCasesofIndifferenceCurves;PerfectComplementsx2x1I2I145o5959Sinceeachof(5,5),(5,9)and(9,5)contains5pairs,eachislesspreferredthanthebundle(9,9)

whichcontains9pairs.

27PreferencesExhibitingSatiationAbundlestrictlypreferredtoanyothersisasatiationpointorablisspoint.Thesatiationpointisthebestbundle.Moreofanythingarenotbetter.Whatdoindifferencecurveslooklikeforpreferencesexhibitingsatiation?28IndifferenceCurvesExhibitingSatiationx2x1Satiation

(bliss)

point29IndifferenceCurvesExhibitingSatiationx2x1BetterBetterBetterSatiation

(bliss)

point30IndifferenceCurvesExhibitingSatiationx2x1BetterBetterBetterSatiation

(bliss)

point31IndifferenceCurvesforDiscreteCommoditiesAcommodityisinfinitelydivisibleifitcanbeacquiredinanyquantity;e.g.waterorcheese.Acommodityisdiscreteifitcomesinunitlumpsof1,2,3,…andsoon;e.g.aircraft,shipsandrefrigerators.32IndifferenceCurvesforDiscreteCommoditiesSupposecommodity2isaninfinitelydivisiblegood(gasoline)whilecommodity1isadiscretegood(aircraft).Whatdoindifference“curves〞looklike?33IndifferenceCurvesWithaDiscreteGoodGasolineAircraft01234Indifference“curves〞

arecollectionsof

discretepoints.34Well-BehavedPreferencesTypicalassumptionsofpreferencesApreferencerelationis“well-behaved〞ifitismonotonicandconvex.Monotonicity:Moreofanycommodityisalwayspreferred(i.e.nosatiationandeverycommodityisagood).ThisimpliesanegativelyslopedIC.35Well-BehavedPreferencesConvexity:Mixturesofbundlesare(atleastweakly)preferredtothebundlesthemselves.E.g.,the50-50mixtureofthebundlesxandyis

z=(0.5)x+(0.5)y.

zisatleastaspreferredasxory.36Well-BehavedPreferences--Convexity.x2y2x2+y22x1y1x1+y12xyz=

x+y2Is(weakly)preferredtobothxandy.37Well-BehavedPreferences--Convexity.x2y2x1y1xyz=(tx1+(1-t)y1,tx2+(1-t)y2)ispreferredtoxandyforall0<t<1.38Well-BehavedPreferences--Convexity.x2y2x1y1xyPreferencesarestrictlyconvex

whenallmixturesz

arestrictly

preferredtotheir

component

bundlesxandy.z39Non-ConvexPreferencesx2y2x1y1zBetterThemixturez

islesspreferredthanxory.Onelikesboth,butdoeswanttoconsumetogether.40MoreNon-ConvexPreferencesx2y2x1y1zBetterThemixturez

islesspreferredthanxory.41Whyconvexity?Itrepresentsamorebalancedpreferenceratherthanapreferencethatinducesaspecialization.Itisnaturaltoconsumethegoodsinvolvedinpositiveamount.Italsoimpliesadiminishingmarginalrateofsubstitution.42SlopesofIndifferenceCurvesThenegativeoftheslopeofanindifferencecurveisitsmarginalrateofsubstitution(MRS).Note:thisisslightlydifferentfromthetextbook,butmydefinitionismorepopular.Thisrepresentsthemaximumamountofx2oneiswillingtogiveupperunitofx1ataspecificconsumptionbundle.43MarginalRateofSubstitutionx2x1x’MRSatx’isthe(negative)slopeofthe

indifferencecurveatx’44MarginalRateofSubstitutionx2x1

MRSatx’is

lim-{Dx2/Dx1}

Dx10

=-dx2/dx1atx’Dx2Dx1x’45MarginalRateofSubstitutionx2x1dx2dx1-dx2=MRS′dx1so,atx’,MRSistherateatwhichtheconsumerisonlyjustwillingtoexchangecommodity2forasmallamountofcommodity1.x’46MRS&Ind.CurvePropertiesBetterWorseGood2Good1Twogoods

anegativelyslopedindifferencecurveMRS>0.47MRS&Ind.CurvePropertiesBetterWorseGood2Bad1Onegoodandone

badapositivelyslopedindifferencecurveMRS<0.Becauseinsteadofgivingup,youhavetoobtainmoregood2foryoutobewillingtoacceptmoregood1.48MRS&In