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1、Chapter Eight,Slutsky Equation Slutsky 方程,由于课件过大，不能上传，本部分删除了6张关于收入效应和替代效应的几何图形的图片，请读者看教材的相关图形。cym,Effects of a Price Change,What happens when a commoditys price decreases? Substitution effect (替代效应）: the commodity is relatively cheaper, so consumers substitute it for now relatively more expensive ot
2、her commodities.,Effects of a Price Change,Income effect （收入效应）: the consumers budget of $y can purchase more than before, as if the consumers income rose, with consequent income effects on quantities demanded.,Effects of a Price Change,x2,x1,Original choice,Consumers budget is $y.,Effects of a Pric
3、e Change,x1,Lower price for commodity 1 pivots the constraint outwards.,Consumers budget is $y.,x2,Effects of a Price Change,x1,Lower price for commodity 1 pivots the constraint outwards.,Consumers budget is $y.,x2,Now only $y are needed to buy the original bundle at the new prices, as if the consum
4、ers income has increased by $y - $y.,Effects of a Price Change,Changes to quantities demanded due to this extra income are the income 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 a
5、nd an income effect.,Real Income Changes,Slutsky asserted that if, at the new prices, less income is needed to buy the original bundle then “real income” is increased more income is needed to buy the original bundle then “real income” is decreased,Real Income Changes,x1,x2,Original budget constraint
6、 and choice,Real Income Changes,x1,x2,Original budget constraint and choice,New budget constraint,Real Income Changes,x1,x2,Original budget constraint and choice,New budget constraint; real income has risen,Real Income Changes,x1,x2,Original budget constraint and choice,Real Income Changes,x1,x2,Ori
7、ginal budget constraint and choice,New budget constraint,Real Income Changes,x1,x2,Original budget constraint and choice,New budget constraint; real income has fallen,Pure Substitution Effect,Slutsky isolated the change in demand due only to the change in relative prices by asking “What is the chang
8、e in demand when the consumers income is adjusted so that, at the new prices, she can only just buy the original bundle?” Use WARP to determine the direction of change.,Pure Substitution Effect Only,x2,x1,x2,x1,Pure Substitution Effect Only,x2,x1,x2,x1,Pure Substitution Effect Only,x2,x1,x2,x1,Pure
9、Substitution Effect Only,x2,x1,x2,x2,x1,x1,Pure Substitution Effect Only,x2,x1,x2,x2,x1,x1,Lower p1 makes good 1 relatively cheaper and causes a substitution from good 2 to good 1.,(x1,x2) (x1,x2) is the pure substitution effect.,And Now The Income Effect,x2,x1,x2,x2,x1,x1,(x1,x2),And Now The Income
10、 Effect,x2,x1,x2,x2,x1,x1,(x1,x2),The income effect is (x1,x2) (x1,x2).,The Overall Change in Demand,x2,x1,x2,x2,x1,x1,(x1,x2),The change to demand due to lower p1 is the sum of the income and substitution effects, (x1,x2) (x1,x2).,Slutskys Effects for Normal Goods,Most goods are normal (i.e. demand
11、 increases with income). The substitution and income effects reinforce each other when a normal goods own price changes.,Slutskys Effects for Normal Goods,x2,x1,x2,x2,x1,x1,(x1,x2),Good 1 is normal because higher income increases demand,x2,x1,x2,x2,x1,x1,(x1,x2),Good 1 is normal because higher incom
12、e increases demand, so the income and substitution effects reinforce each other.,Slutskys Effects for Normal Goods,Since both the substitution and income effects increase demand when own-price falls, a normal goods ordinary demand curve slopes down. The Law of Downward-Sloping Demand therefore alway
13、s applies to normal goods.,Slutskys Effects for Normal Goods,Slutskys Effects for Income-Inferior Goods,Some goods are income-inferior (i.e. demand is reduced by higher income). The substitution and income effects oppose each other when an income-inferior goods own price changes.,Slutskys Effects fo
14、r Income-Inferior Goods,x2,x1,x2,x1,Slutskys Effects for Income-Inferior Goods,x2,x1,x2,x2,x1,x1,Slutskys Effects for Income-Inferior Goods,x2,x1,x2,x2,x1,x1,The pure substitution effect is as for a normal good. But, .,Slutskys Effects for Income-Inferior Goods,x2,x1,x2,x2,x1,x1,(x1,x2),The pure substitution effect is as for a normal good. But, the income effect is in the opposite direction.,Slutskys Effects for Income-Inferior Goods,x2,x1,x2,x2,x1,x1,(x1,x2),The pure substitution effect
