Lecture 18 - Economics 101A (Lecture 18) Stefano DellaVigna...

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Economics 101A (Lecture 18) Stefano DellaVigna October 29, 2009
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Outline 1. Consumer Surplus 2. Trade 3. Rent Control 4. Market Equilibrium in The Long-Run
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1 Welfare: Consumer Surplus Nicholson, Ch. 5, pp. 165-169 (Ch. 5, pp. 145—149, 9th) Welfare e f ect of price change from p 0 to p 1 Proposed measure: e ( p 0 ,u ) e ( p 1 ,u ) Can rewrite expression above as e ( p 0 ,u ) e ( p 1 ,u )= Ã e (0 ,u ) + Z p 0 0 ∂e ( p, u ) ∂p dp ! Ã e (0 ,u )+ Z p 1 0 ∂e ( p, u ) ∂p dp ! = Z p 0 p 1 ∂e ( p, u ) ∂p dp What is ∂e ( p,u ) ∂p ?
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Remember envelope theorem. .. Result: ∂e ( p, u ) ∂p = h ( p, u ) We lfaremesureisintegra lofareatothes ideofH
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Example of welfare e f ects: Imposition of Tax We l fa
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r a d e Nicholson, Ch. 12, pp. 427-429 (Ch. 11, pp. 326— 327, 9th) Assume that domestic industry opens to trade Isth isagoodo rabadth ing?
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This note was uploaded on 09/02/2010 for the course ECON 101a taught by Professor Staff during the Fall '08 term at University of California, Berkeley.

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Lecture 18 - Economics 101A (Lecture 18) Stefano DellaVigna...

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