【正文】 Other goods are divisible goods and can be bought in any quantity (such as gasoline). The line through points A to F is Lisa’s budget line. 169。 2020 Pearson AddisonWesley Consumption Possibilities Household consumption choices are constrained by its ine and the prices of the goods and services available. The budget line describes the limits to the household’s consumption choices. 169。 2020 Pearson AddisonWesley 169。 2020 Pearson AddisonWesley 169。 2020 Pearson AddisonWesley Neuroeconomics Neuroeconomics is the study of the activity of the human brain when a person makes an economic decision. Different decisions appear to activate different areas of the brain. Some decisions are made ? In the prefrontal cortex where memories are stored and data analyzed and might be deemed rational. ? In the hippocampus where memories of anxiety and fear are stored and might be deemed irrational. New Ways of Explaining Consumer Choices 169。 2020 Pearson AddisonWesley Bounded Willpower Bounded willpower is the lessthanperfect willpower that prevents us from making a decision that we know, at the time of implementing the decision, we will later regret. Bounded SelfInterest Bounded selfinterest is the limited selfinterest that sometimes results in suppressing our own interests to help others. Main applications are in finance where uncertainty is the key factor and savings where future is the key factor. New Ways of Explaining Consumer Choices 169。 2020 Pearson AddisonWesley Behavioral Economics Behavioral economics studies the ways in which limits on the human brain’s ability to pute and implement rational decisions influences economic behavior—both the decisions that people make and the consequences of those decisions for the way markets work. There are three impediments to rational choice: ? Bounded rationality ? Bounded willpower ? Bounded selfinterest New Ways of Explaining Consumer Choices 169。 2020 Pearson AddisonWesley Value and Consumer Surplus The supply of water is perfectly elastic, so the quantity of water consumed is large and the consumer surplus from water is large. In contrast, the supply of diamonds in perfectly inelastic, so the price is high and the consumer surplus from diamonds is small. Predictions … 169。 2020 Pearson AddisonWesley The Paradox of Value The paradox of value ―Why is water, which is essential to life, far cheaper than diamonds, which are not essential?‖ is resolved by distinguishing between total utility and marginal utility. We use so much water that the marginal utility from water consumed is small, but the total utility is large. We buy few diamonds, so the marginal utility from diamonds is large, but the total utility is small. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley Table shows Lisa’s justaffordable binations when she has $56 to spend. With $40 to spend, Lisa sees 6 movies and drinks 4 cases of soda a month. With $56 to spend, Lisa spends the extra $16, so she buys more of both goods. She sees 8 movies and drinks 6 cases of soda a month. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley Figure illustrates these predictions. A rise in the price of soda decreases the quantity of soda demanded—a movement along the demand curve for soda. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley A Rise in the Price of Soda Now suppose the price of soda rises. We know that MUS/PS falls, so before the consumer changes the quantities bought, MUS/PS MUM/PM. To restore consumer equilibrium (maximum total utility), the consumer decreases the quantity of soda consumed to drive up the MUS and increases the quantity of movies seen to drive down MUM. These changes restore MUM/PM = MUS/PS. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley Table shows Lisa’s justaffordable binations when the price of a movie is $4. Before Lisa changes what she buys MUM/PM MUS/PS. To maximize total utility, Lisa sees more movies and drinks less soda. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley A Fall in the Price of a Movie When the price of a good falls the quantity demanded of that good increases—the demand curve slopes downward. For example, if the price of a movie falls, we know that MUM/PM rises, so before the consumer changes the quantities bought, MUM/PM MUS/PS. To restore consumer equilibrium (maximum total utility), the consumer increases the movies seen to drive down the MUM and restore MUM/PM = MUS/PS. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley UtilityMaximizing Choice If Lisa spends more on soda and less on movies. MUS decreases and MUM increases. 169。 2020 Pearson AddisonWesley UtilityMaximizing Choice If Lisa spends less on soda and more on movies, … MUS increases and MUM decreases. 169。 2020 Pearson AddisonWesley Lisa’s Marginal Calculation Figure shows why the utilitymaximizing rule works. Each row of the table (on the next slide) shows a justaffordable bination. Start by choosing a row—a point on the budget line. UtilityMaximizing Choice 169。 2020 Pearson AddisonWesley The marginal utility per dollar equals the marginal utility from a good divided by its price. Calling the marginal utility from movies MUM and the price of a movie PM, then the marginal utility per dollar from movies is MUM/PM .