《微观经济学》清华大学课件 Ch15 Market Demand

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1、ChapterFifteenMarketDemandFromIndividualtoMarketDemandFunctionsThinkofaneconomycontainingnconsumers,denotedbyi=1,…,n.Consumeri’sordinarydemandfunctionforcommodityjisFromIndividualtoMarketDemandFunctionsWhenallconsumersareprice-takers,themarketdemandfunctionforcommodityjisFromIndividualtoMarketDeman

2、dFunctionsp1p1p1201535p1’p1”p1’p1”p1’p1”The“horizontalsum”ofthedemandcurvesofindividualsAandB.ElasticitiesElasticitymeasuresthe“sensitivity”ofonevariablewithrespecttoanother.TheelasticityofvariableXwithrespecttovariableYisOwn-PriceElasticityofDemandQ:Whynotjustusetheslopeofademandcurvetomeasureth

3、esensitivityofquantitydemandedtoachangeinacommodity’sownprice?A:Becausethevalueofsensitivitythendependsuponthe(arbitrary)unitsofmeasurementusedforquantitydemanded.ArcandPointElasticitiesAn“average”own-priceelasticityofdemandforcommodityioveranintervalofvaluesforpiisanarc-elasticity,usuallycomputedb

4、yamid-pointformula.Elasticitycomputedforasinglevalueofpiisapointelasticity.ArcOwn-PriceElasticitypiXi*pi’pi’+hpi’-hWhatisthe“average”own-priceelasticityofdemandforpricesinanintervalcenteredonpi’?ArcOwn-PriceElasticitypiXi*pi’pi’+hpi’-hWhatisthe“average”own-priceelasticityofdemandforpricesinanin

5、tervalcenteredonpi’?PointOwn-PriceElasticitypiXi*pi’pi’+hpi’-hWhatistheown-priceelasticityofdemandinaverysmallintervalofpricescenteredonpi’?Ash®0,PointOwn-PriceElasticitypiXi*pi’Whatistheown-priceelasticityofdemandinaverysmallintervalofpricescenteredonpi’?istheelasticityatthepointPointOwn-PriceE

6、lasticityE.g.Supposepi=a-bXi.ThenXi=(a-pi)/bandTherefore,PointOwn-PriceElasticitypiXi*api=a-bXi*a/ba/2a/2bPointOwn-PriceElasticitypiXi*api=a-bXi*a/ba/2a/2bown-priceelasticown-priceinelastic(own-priceunitelastic)PointOwn-PriceElasticityE.g.ThensoPointOwn-PriceElasticitypiXi*everywherealongthedeman

7、dcurve.RevenueandOwn-PriceElasticityofDemandIfraisingacommodity’spricecauseslittle(alotof)decreaseinquantitydemanded,thensellers’revenuesrise.Henceown-priceinelastic(elastic)demandcausessellers’revenuestori