Chapter 9 Buying and Selling. Maximization Program Max U(x 1, x 2 ) Subject to p 1 x 1 +p 2 x 2 = p 1 x 1 0 +p 2 x 2 0 Endowment, price ratio, and U jointly.

Slides:



Advertisements
Similar presentations
Prices Communicate (a)
Advertisements

Chapter 4 Utility Functions. Utility Ordinal Utility: The only property of a utility assignment is “how it orders the bundles of goods.” The size of the.
Laboratory Manual for Introductory Geology
Chapter 6 Combining Sequential and Simultaneous Moves Norton Media Library AVINASH DIXIT SUSAN SKEATH.
Opportunity Cost Question
Chapter Eight Slutsky Equation.
Macroeconomics Week 3b Maclachlan (Fall 04) Principles and Policies I: Macroeconomics Chapter 4: Supply and Demand.
MBMC Copyright c 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6: Perfectly Competitive Supply Slide 1 Profit-Maximizing Firms in.
Supply and Demand Chapter 3. Competitive Market Lots of buyers and sellers dealing in identical goods.
The Market Forces of Supply and Demand
Earth Portrait of a Planet Chapter 20 (part a) Norton Media Library.
Chapter 7 Simultaneous-Move Games with Mixed Strategies I: Zero-Sum Games Norton Media Library AVINASH DIXIT SUSAN SKEATH.
Chapter Nine Buying and Selling. Endowments u The list of resource units with which a consumer starts is his endowment. u A consumer’s endowment will.
SL354, Intermediate Microeconomics Week 1 : March 3 – 7 MondayTuesdayThursdayFriday Exam 1 Exam 2 Exam 3 Exam 4 Exam 5 Problem Set 3 Equilibrium Varian,
EC102: CLASS 7 Christina Ammon. Overview  Fill out evaluation  Moodle Quiz 7  If time: one question from old problem set.
Earth Portrait of a Planet Chapter 20 (part b) Norton Media Library.
Chapter Nine Buying and Selling. u Trade involves exchange -- when something is bought something else must be sold. u What will be bought? What will be.
Chapter Nine Buying and Selling. u Trade involves exchange, so when something is bought something else must be sold. u What will be bought? What will.
Games of Strategy THIRD EDITION
Chapter 4 Demand and Supply. The Market can be a location, network of buyers and sellers for a product, demand for a product or a price-determination.
Course: Microeconomics Text: Varian’s Intermediate Microeconomics.
© 2010 W. W. Norton & Company, Inc. 9 Buying and Selling.
8 Slutsky Equation.
Consumer Behavior 06 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Nine Buying and Selling. u Trade involves exchange -- when something is bought something else must be sold. u What will be bought? What will be.
Consumer Behavior 06 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 3 Preferences.
Lecture 5. How to find utility maximizing bundle/ optimal bundle A consumer if better off if he can reach to a higher indifference curve. Due to the limited.
+ Demand Chapter 4 What is Elasticity of Demand? Section 3.
PowerPoint Slides by Robert F. BrookerHarcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Managerial Economics in a Global Economy.
Supply & Demand. Market Economy In a market economy goods and services are made available through supply and demand Consumers decide what is supplied.
Elasticity of demand is a measure of how consumers react to a change in price.  Demand for a good that consumers will continue to buy despite a price.
Microeconomics precourse – Part 2 Academic Year Course Presentation This course aims to prepare students for the Microeconomics course of the.
1 Endowments. 2 Buying and Selling Trade involves exchange -- when something is bought something else must be sold. What will be bought? What will be.
Norton Media Library AMERICA A NARRATIVE HISTORY EIGHTH EDITION - Brief by George Brown Tindall and David Emory Shi.
UNIT II Markets and Prices. Law of Demand Consumers buy more of a good when its price decreases and less when its price increases.
Art Presentation Slides Concise History of Western Music FOURTH EDITION by BARBARA RUSSANO HANNING.
Demand A Schedule Showing the Consumers are Willing and Able to Purchase At a Specified Set of Prices During A Specified Period of Time Amounts of a Good.
Labor Economics Instructor’s Resource Disc INTRODUCTION TO CLASSIC AND
Chapter 4: Demand Opener. Copyright © Pearson Education, Inc.Slide 2 Chapter 4, Opener Essential Question How do we decide what to buy.
Chapter 9 BUYING AND SELLING. 9.1 Net and Gross Demands Endowments : (  1,  2 )  how much of the two goods the consumer has before he enters the market.
Factors that Shift Demand & Supply. Variables that influence buyers 1 2 VariableA Change in This Variable... Price of the good itself Income Prices of.
Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved. Slide 1 Managerial Economics.
 I can DEFINE supply and demand and understand how, together, they determine MARKET PRICES.
Demand and Supply Chapters 4, 5 and 6. Demand demand is a schedule that shows the various amounts of a product consumers are WILLING and ABLE to BUY at.
 A market is an institution or mechanism which brings together buyers and sellers of particular goods and services. ◦ May be local, national, or international.
Chapter 2 Budget Constraint. The Budget Constraint  m=p1*x1+p2*x2  where I=income, assumed to be given  p1=price of x1, assumed to be given.  p2=price.
06 Consumer Behavior Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
06 Consumer Behavior Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Chapter 1: Appendix The Basics of Demand, Supply, and Equilibrium
Chapter 2 Measuring Economic Growth and Development
Supply and Demand I: How Markets Work
Chapter 29 Game Applications Norton Media Library Chapter 29
Ch 4 Chapter 4 Learning Lee Alan D ugatkin.
Chapter 15 Norton Media Library Chapter 15 Government and Society
Chapter 2 Measuring Economic Growth and Development
Saving, Investment, and Capital Flows
Chapter 20 Sustainable Development Norton Media Library Chapter 20
Chapter 7 Population Norton Media Library Chapter 7 Dwight H. Perkins
Part Two PART FOUR Production and Trade.
The Founding and the Constitution Chapter 2 Norton Media Library
Chapter 8 Education Norton Media Library Chapter 8 Dwight H. Perkins
Chapter 4 Norton Media Library
Best Social Media Marketing Company
Chapter 4 Theories of Economic Growth Norton Media Library Chapter 4
06 Consumer Behavior Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Distribution and Human Resources
Chapter 9 Buying and Selling.
Chapter 3 Economic Growth: Concepts and Patterns Norton Media Library
Saving, Investment, and Capital Flows
Presentation transcript:

Chapter 9 Buying and Selling

Maximization Program Max U(x 1, x 2 ) Subject to p 1 x 1 +p 2 x 2 = p 1 x 1 0 +p 2 x 2 0 Endowment, price ratio, and U jointly determine whether you will be acting as a seller or a buyer.

Factors affecting the budget line Endowment (shifting the budget line without changing the slope). It produces an income effect. Prices (rotating the budget line around the endowment point). It produces both substitution and income effects.

09.01

09.02

Buyer or Seller as Price Changes The following diagram shows that you remain as a seller in the x1 market. A further decrease in p1 may move you from a seller to a buyer in the x1 market. Derive the demand for x1 for a model with initial endowments.

09.03

09.04

09.05

09.06

Slutsky Equation with Initial Endowments Pure substitution Effect Income Effect Endowment Effect

09.07

Example: Leisure-Choice Model Max U(C, L) S.t. C=w(T-L)+V

09.08

09.09

09.10

This concludes the Norton Media Library Slide Set for Chapter 9 Intermediate Microeconomics 6 th Edition by Hal R. Varian W. W. Norton & Company Independent and Employee-Owned

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com Inc. All rights reserved.