W hen you walk into a store, you are confronted with thousands of goods that
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- Quantity of Pizza Quantity of Pepsi
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6 The Consumer’s Optimum the consumer chooses the point on her budget constraint that lies on the highest indifference curve. at this point, called the optimum, the marginal rate of substitution equals the relative price of the two goods. Here the highest indiffer- ence curve the consumer can reach is I 2 . the consumer prefers point a, which lies on indifference curve I 3 , but she cannot afford this bundle of pizza and Pepsi. By contrast, point B is affordable, but because it lies on a lower indifference curve, the consumer does not prefer it. Quantity of Pizza Quantity of Pepsi 0 Optimum A B Budget constraint I 1 I 2 I 3 65875_ch21_ptg01_433-460.indd 442 15/10/13 11:53 AM Copyright 201 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. CHAPTER 21 the theOrY OF CONSUMer ChOICe 443 substitution between pizza and Pepsi, and the slope of the budget constraint is the relative price of pizza and Pepsi. Thus, the consumer chooses consumption of the two goods so that the marginal rate of substitution equals the relative price. In Chapter 7, we saw how market prices reflect the marginal value that con- sumers place on goods. This analysis of consumer choice shows the same result in another way. In making her consumption choices, the consumer takes as given the relative price of the two goods and then chooses an optimum at which her mar- ginal rate of substitution equals this relative price. The relative price is the rate at which the market is willing to trade one good for the other, whereas the marginal rate of substitution is the rate at which the consumer is willing to trade one good for the other. At the consumer’s optimum, the consumer’s valuation of the two goods (as measured by the marginal rate of substitution) equals the market’s valuation (as measured by the relative price). As a result of this consumer optimi- zation, market prices of different goods reflect the value that consumers place on those goods. tải về 1.28 Mb. Chia sẻ với bạn bè của bạn:
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