中微15-16章课件.ppt

1、FIndividual and market demandFElasticityFElasticity and RevenueFElasticity and Marginal revenue FLaffer curveFOften think of market behaving like a single individual representative consumer modelFTo get market demand, just add up individual demandsFInverse of aggregate demand curve measures the MRS

2、for each individualQ(a)Adams demandPDADADEDE(b)PQEvas demandP1QAQEQ(A+E)(c)At any given pricePD(A+E)D(A+E)Q+=market demand2. ElasticityFmeasures responsiveness of demand to priceFCan we use slope to measure the responsiveness?FElasticity is a better way: independent of units of measurementFThe price

3、 elasticity of demandExample for linear demand curvepiXi*api = a - bXi*a/b Xpiiiipap*, 10a/2a/2b | |1|1| |1|13. Elasticity and RevenueR ppXp( )( ).* Sellers revenue isSo Xp*( ).1 dpdX)p(Xp1)p(X*dRdpXppdXdp *( )Elasticity and Revenue dRdpXp *( ) 1 so if 1thendRdp 0and a change to price does not alter

4、sellers revenue.Elasticity and Revenue dRdpXp *( ) 1 but if 10 thendRdp 0and a price increase raises sellersrevenue.Elasticity and Revenue dRdpXp *( ) 1 And if 1thendRdp 0and a price increase reduces sellersrevenue. 10 Own-price inelastic demand;price rise causes rise in sellers revenue.Own-price un

5、it elastic demand;price rise causes no change in sellersrevenue. 1Own-price elastic demand;price rise causes fall in sellers revenue. 1MR qdR qdq( )( ). p(q) denotes the sellers inverse demand function; i.e. the price at which the seller can sell q units. ThenMR qdR qdqdp qdqqp q( )( )( )( ) R qp qq

6、( )( ) so p qqp qdp qdq( )( )( ).1MR qp qqp qdp qdq( )( )( )( ). 1 dqdppqandsoMR qp q( )( ). 11 Selling onemore unit raises the sellers revenue. Selling onemore unit reduces the sellers revenue. Selling onemore unit does not change the sellersrevenue.If 1thenMR q( ). 0If 10 thenMR q( ). 0If 1thenMR

7、q( ). 0An example with linear inverse demand.p qabq( ). ThenR qp q qabq q( )( )() andMR qabq(). 2p qabq( ) MR qabq() 2aa/bpqa/2bP PQQElasticity, marginal revenue and revenueD(AR)BAelasticEd(-)1inelasticMR0CMaximum P*Q*elasticelastic0P*Q*revenueLaffer curveFhow does tax revenue respond to changes in

8、tax rates?FHow to construct the model?FMarket EquilibriumFSpecial casesFTaxes: nice example of comparative statics Passing along a tax Deadweight loss of a tax Pareto efficiencypD(p), S(p)q=D(p)MarketdemandMarketsupplyq=S(p)p*q*D pabp( ) S pcdp( ) D pabp( ) S pcdp( ) At the equilibrium price p*, D(p

9、*) = S(p*).That is,abpcdp *which givespacbd* andqD pS padbcbd*()(). qD pabppaqbDq ( )( ),1qS pcdppcqdSq ( )( ),1the equation of the inverse marketdemand curve. Andthe equation of the inverse marketsupply curve.pDqaqb 1( )pSqcqd 1( ).andAt the equilibrium quantity q*, D-1(p*) = S-1(p*).That is,aqbcqd

10、 *which givesqadbcbd* andpDqSqacbd*()(). 11QPp*Q*Demand curveSupply curvePQQ*p*Supply curveDemand curveAB2. Special casesSpecial casesFvertical supply quantity determined by supply, price determined by demandFhorizontal supply quantity determined by demand, price determined by supplyFLet Pr be the p

11、rice received by producers Pp be the price paid by consumersproducersconsumerspD(p), S(p)MarketdemandMarketsupplyp*q*No taxCSPSpD(p), S(p)MarketdemandMarketsupplyp*q*$tppqtprCSPSTaxDeadweight losspD(p), S(p)MarketdemandMarketsupplyp*q*$tpbqtpsDeadweight losspD(p), S(p)MarketdemandMarketsupplyp*q*$tp

12、bqtpsDeadweight loss fallsas market demandbecomes less own-price elastic.pD(p), S(p)MarketdemandMarketsupplyps= p*$tpbqt = q*When D = 0, the tax causes no deadweight loss.Pareto efficiencyFefficient output is where demand equals supplyFbecause that is where demand price equals supply priceFthat is, the marginal willingness to buy equals the marginal willingness to sellFdeadweight loss measures loss due to inefficiencyFChapter 15: 1 4, 5FChapter 16: 1, 2, 5