Tài liệu Describing Consumer Preferences Using Indifference Curves pptx

© 2003 McGraw-Hill Ryerson Limited Describing Describing Consumer Consumer Preferences Using Preferences Using Indierence Curves Indierence Curves Chapter 8 Appendix Chapter 8 Appendix © 2003 McGraw-Hill Ryerson Limited.  Income expansion path Income expansion path ◆ Income expansion path -IEP- traces all the best (utility-maximizing) choices a consumer makes as income changes. ●   ●   © 2003 McGraw-Hill Ryerson Limited.  Income expansion path, Income expansion path, Fig. A8-1 a and b, p 195 Fig. A8-1 a and b, p 195                    !   © 2003 McGraw-Hill Ryerson Limited. " Engel Curves Engel Curves ◆ An Engel curve plots all the best choices a consumer makes against INCOME. ● #$%##&# ◆ If an Engel curve is upward sloping, a good is normal; downward sloping indicates an inferior good. © 2003 McGraw-Hill Ryerson Limited. ' Engel Curves, Engel Curves, Fig. A8-2, p 195 Fig. A8-2, p 195 (##&  $       $#$ )*& $#$  )$#&  © 2003 McGraw-Hill Ryerson Limited. + Price Expansion Path Price Expansion Path ◆ Price expansion path – PEP – traces all the best choices of a consumer as the relative price changes. © 2003 McGraw-Hill Ryerson Limited. , Price Expansion Path, Price Expansion Path, Fig. A8-3, p 195 Fig. A8-3, p 195   )*  & )*       © 2003 McGraw-Hill Ryerson Limited.  Income and Income and substitution eects substitution eects ◆ The law of demand states that there is an inverse relationship between price and quantity demanded. Two effects occur: ● $/$# ● 01###/$# © 2003 McGraw-Hill Ryerson Limited. 2 Income and Income and substitution eects substitution eects ◆ Income effect reflects the purchasing power change as a result of the change in price. ● 3#$$$/# 1&4$$ ● 3#$$$/# 1&4$$5 © 2003 McGraw-Hill Ryerson Limited. 6 Income and Income and substitution eects substitution eects ◆ Substitution effect reflects our willingness to switch consumption away from goods that become relatively more expensive. ● #7$81& #9 ● ###81&# #7&*7$#5 [...]... Deriving the Demand Curveoffor Good X, Figure A8Price 5b, p 197 Good X P1 b)Demand curve A B P2 C P3 Demand X X X 1 2 3 Quantity of Good X © 2003 McGraw-Hill Ryerson Limited Describing Consumer Preferences Using Indifference Curves End of Chapter 8 Appendix © 2003 McGraw-Hill Ryerson Limited . McGraw-Hill Ryerson Limited Describing Describing Consumer Consumer Preferences Using Preferences Using Indierence Curves Indierence Curves Chapter 8 Appendix Chapter. McGraw-Hill Ryerson Limited Describing Describing Consumer Consumer Preferences Using Preferences Using Indierence Curves Indierence Curves End of Chapter