by fong tze wing (98059610) chinese university of hong kong postgraduate diploma in education...
TRANSCRIPT
By Fong Tze Wing (98059610)
Chinese University of Hong Kong
Postgraduate Diploma in Education
Course: Educational Technology and Communication (EDD5161F)
Instructor: Professor Lee Fong Lok
Student name: Fong Tze Wing
SCT (ECON) PTD Year 2
Student number: 98059610
By Fong Tze Wing (98059610)
Form Six
A-Level Economics
Indifference Curve Approach
Target Students :
Topic :
Subject :
By Fong Tze Wing (98059610)
After this lesson, the students should
i. understand the derivation and meaning of a budget line.
ii. know how to find the utility-maximizing consumption point.
iii. know the effect of change in income and prices
on the utility-maximizing consumption point.
iv. understand the income effect and substitution effect
due to a change in price.
Objective
By Fong Tze Wing (98059610)
Why choosing this topic for presentation?
Since this topic requires students to learn the graphical
presentation of budget lines and indifference curves, the
students may find it difficult to understand as they were just promoted from certificate level.
By using Powerpoint presentation, teachers are expected to
present this abstract concept in the lesson more clearly and
effectively.
By Fong Tze Wing (98059610)
Derivation Of
A Budget Line
By Fong Tze Wing (98059610)
1. Mr. A has $1000 money income (I) Px = $5 & Py = $10
2. Suppose Mr. A spends all his money income on good x & good y, what combinations of good x & good y can be bought?
By Fong Tze Wing (98059610)
I = $1000Px = $5 & Py = $10
Y
X0
100$1000 = $10
200= $1000 $5
Budget Line
40
?120
By Fong Tze Wing (98059610)
Do you know
the meaning of
a budget line now?
By Fong Tze Wing (98059610)
Budget Line :-- Maximum combination of good X & good Y that can be bought by a consumer, given his money income & the prices of good X & good Y.
I = $1000Px = $5 & Py = $10
Y
X0
100$1000 = $10
200 = $1000 $5
Budget Line
By Fong Tze Wing (98059610)
I = Px ． X + Py ． YY = I / Py - ( Px / Py )X
Y
X0
I Py
I Px
Slope of BL = -Px/Py
BL
By Fong Tze Wing (98059610)
Which combination of good X & good Y should be bought ?
Utility Maximization
Subject to Budget Constraint
By Fong Tze Wing (98059610)
How many good X & good Y will give him the highest utility level ?
Y
X0 U1
U6
U5U4U3U2
By Fong Tze Wing (98059610)
To maximize utility under budget constraint
-> How many X & Y should be bought ?Y
X0 U1
U6U5
U4U3
U2e
a
f
d
b
gBL
．
．．c．
．．
．
By Fong Tze Wing (98059610)
Y
X0
U3
．dY1
X1
Utility - maximizing consumption point
By Fong Tze Wing (98059610)
When will the consumption point change ?
A. in Money Income
B. in Px
C. in Py
By Fong Tze Wing (98059610)
in Money Income
Y
X0
U1
100
200
I1 = $1000Px = $5Py = $10
Y1
X1
I2 = $1500
Y2
X2
150
300
BL2
slope of BL ??
BL1
U2
By Fong Tze Wing (98059610)
in Px
U1
Y
X0
100
200
I1 = $1000Px = $5Py = $10
Y1
X1
BL1
$2.5
BL2
400
Y2
X2
U2
By Fong Tze Wing (98059610)
U2
BL2
Y2
X2
in Py
Y
X0
100
200
I1 = $1000Px = $5Py = $10
Y1
X1
BL1
U1
$12.5
80
By Fong Tze Wing (98059610)
Price Qx
Relative Price of good Xin terms of good y Qx
: Substitution Effect
Real Income
Qx ( if normal good )
Qx ( if inferior good )
: Income Effect
By Fong Tze Wing (98059610)
Y
X0
U1
BL1
U2
BL2
．．E1
E2
X1 X2X3
E2
SE : Real income remains unchanged , relative price : X1 X3
SE
IE : Relative price remains unchanged, real income
: X3 X2
IE
X is a normal good !
Positive IE
By Fong Tze Wing (98059610)
By Fong Tze Wing (98059610)
Just find the ANSWER
by YOURSELVES!
By Fong Tze Wing (98059610)End of Powerpoin
t Presentation in the
topic ‘indifference curve approach
‘
By Fong Tze Wing