From Revealed Preference to Indifference Curves 2 bundles revealed to be strictly preferred to A bundles revealed to be Possible indifference less preferred to curve X1 北京大学经济学院 Slide31
北京大学经济学院 Slide31 From Revealed Preference to Indifference Curves x2 x1 A bundles revealed to be strictly preferred to A bundles revealed to be less preferred to A Possible indifference curve
Revealed Preference Theory application: Index Numbers(指数) Over time, many prices change. Are consumers better or worse off "overall as a consequence? tility cannot be directly observed Index numbers give approximate answers to such questions 北京大学经济学院 Slide32
北京大学经济学院 Slide32 Revealed Preference Theory Application: Index Numbers(指数) • Over time, many prices change. Are consumers better or worse off “overall” as a consequence? • Utility cannot be directly observed. • Index numbers give approximate answers to such questions
Quantity Index Numbers A quantity index is a price-Weighted average of quantities demanded pxi+p2X a p1 X1+p2X (P1, P2)can be base period prices(pl, P2) or current period prices(p, p2 t) 北京大学经济学院 Slide33
北京大学经济学院 Slide33 Quantity Index Numbers • A quantity index is a price-weighted average of quantities demanded; • (p1,p2) can be base period prices (p1b,p2b) or current period prices (p1t,p2t). I p x p x p x p x q t t b b = + + 1 1 2 2 1 1 2 2
Quantity Index Numbers If (p, p2)=(p,,P2)then we have the Laspeyres quantity index(拉氏指数)冫 pixi+p2x3 = p1x1+p2X2 北京大学经济学院 Slide 34
北京大学经济学院 Slide34 Quantity Index Numbers • If (p1,p2) = (p1b,p2b) then we have the Laspeyres quantity index(拉氏指数); L p x p x p x p x q b t b t b b b b = + + 1 1 2 2 1 1 2 2
Quantity Index Numbers If (p, P2)=(p, p2 t), then we have he paasche quantity index(帕氏指 数) t piX Pq pixi t1b piXi+ p2X 北京大学经济学院 Slide 35
北京大学经济学院 Slide35 Quantity Index Numbers • If (p1,p2) = (p1t,p2t) ，then we have the Paasche quantity index（帕氏指 数）; P p x p x p x p x q t t t t t b t b = + + 1 1 2 2 1 1 2 2