中微课件范里安版 Micro Ch31.ppt

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1、ChapterThirty-OneProductionExchangeEconomies(revisited)Noproduction,onlyendowments,sonodescriptionofhowresourcesareconvertedtoconsumables.Generalequilibrium:allmarketsclearsimultaneously.1stand2ndFundamentalTheoremsofWelfareEconomics.WewillConsider1.Oneconsumer,oneproduct,onefactor;2.Twoconsumers,

2、twoproducts,twofactors;RobinsonCrusoe’sEconomyOneagent,RC.Endowedwithafixedquantityofoneresource--24hours.Usetimeforlabor(production)orleisure(consumption).Labortime=L.Leisuretime=24-L.WhatwillRCchoose?RobinsonCrusoe’sTechnologyLabor(hours)CoconutsProductionfunction240FeasibleproductionplansRobin

3、sonCrusoe’sPreferencesRC’spreferences:coconutisagoodleisureisagoodRobinsonCrusoe’sPreferencesLeisure(hours)CoconutsMorepreferred240RobinsonCrusoe’sPreferencesLabor(hours)CoconutsMorepreferred240RobinsonCrusoe’sChoiceLabor(hours)CoconutsProductionfunction240Leisure(hours)240C*L*LaborLeisureMRS=MPLO

4、utputRobinsonCrusoeasaFirmNowsupposeRCisbothautility-maximizingconsumerandaprofit-maximizingfirm.Usecoconutsasthenumerairegood;i.e.priceofacoconut=$1.RC’swagerateisw.CoconutoutputlevelisC.RobinsonCrusoeasaFirmRC’sfirm’sprofitis=C-wL.=C-wLC=+wL,theequationofanisoprofitline.Slope=+w.Intercept=.

5、IsoprofitLinesLabor(hours)Coconuts24Higherprofit;Slopes=+w0Profit-MaximizationLabor(hours)CoconutsProductionfunction24C*L*Isoprofitslope=productionfunctionslopei.e.w=MPL=1MPL=MRPL.Givenw,RC’sfirm’squantitydemandedoflaborisL*andoutputquantitysuppliedisC*.LabordemandOutputsupplyRCgets0Utility-Maxim

6、izationNowconsiderRCasaconsumerendowedwith$*whocanworkfor$wperhour.WhatisRC’smostpreferredconsumptionbundle?BudgetconstraintisUtility-MaximizationLabor(hours)Coconuts240C*L*Givenw,RC’squantitysuppliedoflaborisL*andoutputquantitydemandedisC*.LaborsupplyOutputdemandBudgetconstraint;slope=wMRS=wUtil

7、ity-Maximization&Profit-MaximizationProfit-maximization:w=MPLquantityofoutputsupplied=C*quantityoflabordemanded=L*Utility-Maximization&Profit-MaximizationProfit-maximization:w=MPLquantityofoutputsupplied=C*quanti