Chapter Fourteen Consumer's Surplus 消费者剩余
Chapter Fourteen Consumer’s Surplus 消费者剩余
Structure Money equivalent of utility gains to trade ◆ Consumers surp|Us Changes in consumer's surplus 4 Compensating and equivalent variations ◆ Producer' s surplus
Structure ◆Money equivalent of utility gains to trade ◆Consumer’s surplus ◆Changes in consumer’s surplus ◆Compensating and equivalent variations ◆Producer’s surplus
Monetary measures of Gains-to T rade You can buy as much gasoline as you wish at $1 per gallon once you enter the gasoline market Q: What is the most you would pay to enter the market? A: You would pay up to the dollar value of the gains-to-trade you would enjoy once in the market
Monetary Measures of Gains-toTrade ◆You can buy as much gasoline as you wish at $1 per gallon once you enter the gasoline market. ◆Q: What is the most you would pay to enter the market? ◆A: You would pay up to the dollar value of the gains-to-trade you would enjoy once in the market
Monetary Measures of Gains-to Trade e How can such gains-to-trade be measured? e Three such measures are: Consumer's Surplus Equivalent variation(等价变换),and Compensating Variation(补偿变换) Only in one special circumstance do these three measures coincide
◆ How can such gains-to-trade be measured? ◆ Three such measures are: • Consumer’s Surplus • Equivalent Variation （等价变换）, and • Compensating Variation （补偿变换）. ◆ Only in one special circumstance do these three measures coincide. Monetary Measures of Gains-toTrade
Reservation price o Maximum willingness to pay for an additional unit of a good Two goods: good 1(X, and expenditure on others(x2 ;p2=1 By budget constraint (p,X,+x2=m): Ifx,=0, then x m If X,=1, then x,=m-p If X1=2, then x2 =m-2p1 If X,3, then x2=m-3p
Reservation Price ◆Maximum willingness to pay for an additional unit of a good ◆Two goods: good 1 (x1 ) and expenditure on others (x2 ); p2=1 ◆By budget constraint (p1x1+x2=m): If x1=0, then x2=m If x1=1, then x2=m-p1 If x1=2, then x2=m-2p1 If x1=3, then x2=m-3p1