Properties of Demand
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1 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND AGEC 5733 cl ot /4 /9 d / rort of Dmd Grl rort of Dmd:. El Arto. Homoty 3. Courot d 4. Symmtry Mtr of Eltct M α α M M α L LL M M wr dtur Q d rc Bf or F W K Bf BB B BF W B or B F W F FB F FF W F Wr BB FF r ow-rc ltct d B BF B F FB F r cro-rc ltct d W B W W F r dtur ltct. rc & com r coomc vrbl. No-coomc vrbl rltd to coumr rfrc my b cludd o-coomc vrbl.
2 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND A Dcuo of Grl rort of Dmd. El Arto or T Add-u Codto Wr r budt r of commodty d r dtur ltct Δ % %Δ From Mrll dmd fucto } { Q Dffrtt wt rct to } { Q Uully w mo omoty & ymmtry or courot rtrcto.. Courot Arto B FB F B BB B Bf
3 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND B B F F or B BF F F FF F F 3. Homoty K Bf BB B BF B or B F F FB F FF F θ θ T rtrcto ml tt t dmd fucto r omoou of dr zro rc d com. It lo ow t bc of moy lluo c t ut wc rc d outly r rd v o ffct o urc. 4. Symmtry Symmtry m tt t mtr of ubttuto ffct ymmtrc. Subttuto ffct r from Hc dmd. Mrll Ordry VS Hc Comtd dmd Mrll dmd: Mmz utlty ubct to t budt cotrt: Q A B U U 5 4 Q 3
4 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND Hc dmd: U Mmz cot ubct to t v utlty U : Q B A 4 Q Eml: If w um f d bf r ubttut cr t rc of f would v two ffct. O com ffct d t otr ubttuto ffct. Icr t rc of F F would v two ffct: Icom ffct: Rl Q d B Subttuto ffct: d Q B T mtr of ubttuto ffct ymmtrc: 4
5 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND 5 LL M L c c c Q from ou torm y y y Sluty uto Wr rrt t Mrll ordry dmd fucto d rrt t Hc comtd dmd fucto. wr & rrt t ubttuto ffct d & rrt t com ffct. Icom ffct for orml ood otv.
6 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND Fb 9 U t Grl rort of Dmd to Icr Dr of Frdom Rduc t umbr of rmtr to b tmtd Wy do w mo t dmd rtrcto? to rduc t umbr of rmtr to b tmtd. Totl umbr of rmtr to b tmtd: : drct rc ltct; - cro-rc ltct; d com ltct. By mo t rl rort rtrcto of dmd w wll rduc t umbr of rmtr tt would d to b tmtd: rort T rducto t umbr of rmtr to b tmtd Add-uEl Arto Homoty or Courot Symmtry - / Totl umbr of rmtr to b tmtd wt rtrcto: ---{ -/}/ -.. I c of 3 commodt t rmtr you v to tmt wt rtrcto r
7 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND Smlrly I c of 5 commodt t rmtr you v to tmt wt rtrcto r rtculr Rtrcto of Dmd Addtvty d Srblty Icom Food No Food Gr Mt Dry Bvr R&W mt Otr Ml Ic-crm Coff Co Bf or Cc Aum tt t utlty rovdd by t coumto of o ood ddt of t coumto of y otr ood. Addtvty U U U ㆍㆍㆍㆍㆍ U m U f m commodt rttod to m rou. T bov uto c b rd blow f w rblty old. U f f ㆍㆍㆍㆍㆍ f m m U f U Qudrtc utlty 7
8 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND 8 U MU U U I t bov Qudrtc fucto ddtv? U T ddc of t MU of ood from t coumto of ood do ot mly tt of t rc of ood lv t dmd of ood uffctd. Tt by um ddtvty t cro ubttuto ffct do ot v. W Srblty: T MRS btw I d ot ffctd by t utty coumd of y commodty outd t rou uc ood ; wr & blo to t m rou. r r r r m r f f LL LL LL / Stro Srblty: T MRS btw I d ot ffctd by t utty coumd of y commodty outd t rou uc ood ; wr & blo to two rt rou. / Q J I f f
9 AGEC 5733 LECTURE NOTES DR. SHIDA HENNEBERR ROERTIES OF DEMAND Wr I Bf t mt ctory J Ic crm t dry ctory Q Coff t bvr ctory 9
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