Chapter nine Buying and Selling
Chapter Nine Buying and Selling
What Are We Doing in this Chapter? We expand our basic consumer choice framework to include the possibility that consumers can sel something to generate income Again in terms of theoretical framework nothing is new
What Are We Doing in this Chapter? We expand our basic consumer choice framework to include the possibility that consumers can sell something to generate income. Again, in terms of theoretical framework, nothing is new
Endowments禀赋 The list of resource units with which a consumer starts is his endowment A consumers endowment wil be denoted by the vector @(omega)
Endowments 禀赋 The list of resource units with which a consumer starts is his endowment. A consumer’s endowment will be denoted by the vector (omega).
Endowments Eg.O=(01,O2)=(10,2) states that the consumer is endowed with 10 units of good 1 and 2 units of good 2. What is the endowments value? For which consumption bundles may it be exchanged?
Endowments E.g. states that the consumer is endowed with 10 units of good 1 and 2 units of good 2. What is the endowment’s value? For which consumption bundles may it be exchanged? = ( , ) = ( , ) 1 2 10 2
Budget Constraints revisited So, given p, and p2, the budget constraint for a consumer with an endowment (@1,@2)is p1X1+p2X2=p1a1+p202 The budget set is {(x1,x2)P1x1+p2x2≤p11+P2O2, X1≥0,x≥0
Budget Constraints Revisited So, given p1 and p2 , the budget constraint for a consumer with an endowment is The budget set is ( , ) 1 2 p1 x1 + p2 x2 = p1 1 + p2 2 . ( , ) , , . x x p x p x p p x x 1 2 1 1 2 2 1 1 2 2 1 0 2 0 + +