Paper Keywords: utility utility quantity utility ordinal utility consumer equilibrium indifference curve?
Abstract: Utility is one of the most classic terms in microscopy, which has the main characteristics of subjectivity, measurability, degression and renewability. Through the utility theory, it is proved that rational consumers can realize the effective allocation of given resources and satisfy their greatest desires, and the conditions of consumer equilibrium are deduced as follows: consumers should make the ratio of marginal utility to price of various commodities they buy equal; In other words, the marginal utility brought by the last dollar spent by consumers on each commodity is equal, that is, the marginal utility of money is equal.
1 the meaning and nature of utility
1 1 utilities
? Utility is one of the most classic terms in microeconomics, which can be traced back to Aristotle's knowledge. Utility as an economic category first appeared in Ferdinando? What does Galliani mean by "On Money" published in 175 1? The property that things can make us happy? . The understanding of utility in economics, as Samuelson said in the book Economics, Can utility be understood as a person's subjective enjoyment or usefulness from consuming a commodity or service? . Get spiritual and immaterial content from utility? Is that clear? Go out and avoid economics being involved in ethical debates. Samuelson added a sentence immediately after the above definition. More precisely, utility refers to how consumers rank different goods and services. . A form widely used in economics now? Utility? 、? Cardinal utility theory? And then what? Ordinal utility theory? . Understanding of utility: utility is the degree of satisfaction that consumers get from consuming something. Consumers get satisfaction from consuming something, which is a positive effect, while feeling pain is a negative effect. The basic understanding of cardinal utility theorists is that utility is satisfaction or happiness obtained from the increase of consumption and happiness, and utility can be measured and added; The basic understanding of ordinal utility theorists is that utility reflects personal preference and is a psychological phenomenon, which cannot be measured or summarized and can only be arranged in order. So utility can only be expressed by ordinal number.
The properties of 1 2 public utilities
? Subjectivity of (1) utility. Utility is the satisfaction of desire, and it is a psychological phenomenon and subjective feeling when consumers consume something. First of all, the utility varies from person to person, from time to time and from place to place, that is, the utility of the same item is different for different people, such as bread and drinks. Zhang thinks that the utility of bread is greater than that of drink, and Wang thinks that the utility of drink is greater than that of bread; For the same person, the utility of the same item may be different at different times and places, such as the same down jacket, which brings great utility in winter and cold places, and may bring negative utility in summer and tropical areas. Secondly, the subjectivity of utility refers to the psychological subjective feelings of consumers, not the attributes of the goods themselves. The attribute of commodity itself is determined by its physical or chemical properties, which is generally called the use value of commodity. It describes the objective attributes of commodities, not determined by people's values, beliefs and personality characteristics. The description of people's utility from the perspective of goods reflects a relationship between people and goods, which is determined by people's values, beliefs and personality characteristics, and emphasizes consumers' subjective feelings of satisfaction with a certain commodity. No matter how useful an article is objectively, for a specific consumer, its utility only depends on the scarcity of the article and his subjective evaluation on this basis. Thirdly, the subjectivity of utility lies in that people can restrain some desires that have nothing to do with survival, those that are unfavorable to others or those that cannot be satisfied under normal circumstances through subjective initiative, and reduce the utility level of corresponding goods or behaviors, that is, transform their own values, beliefs and life ideals. Restraining these unreasonable desires can not only keep people's souls away from pain, but also provide people with more satisfaction than filling the gap of unreasonable desires with commodities or behaviors. And urge people to realize some reasonable desires that they have the ability to satisfy. Finally, although utility belongs to subjective category, it does not include coherent judgment. As long as things can satisfy people's desires, they can be effectively used. Whether desire itself conforms to social ethics is beyond the scope of utility evaluation.
? (2) The measurability of utility. The word utility has been expressed and understood differently in the history of economics. There are cardinal utility theory and ordinal utility theory. Cardinal utility theory holds that utility can be measured and summarized, while ordinal utility theory holds that utility cannot be measured, let alone summarized. In economics, these two diametrically opposed theories are often introduced to readers in the same chapter, and they can live in peace, which may be unique in other disciplines. The reason is that the utility can be measured, regardless? Cardinal utility theory? , or? Ordinal utility theory? Although the analysis methods are different, the conditions of consumer equilibrium are the same, so these two theories can live in peace. Ordinal utility theory holds that utility is a subjective psychological evaluation of consumers' ability to satisfy their own desires, which reflects personal preferences, cannot be measured, can only be ranked, and denies the measurement of utility. Then how does consumers' subjective evaluation system rank the satisfaction of specific commodities? Obviously, this question is of vital importance. Samuelson was the first economist to realize this problem. He deliberately constructed it? Display preference theory? That is, when a consumer chooses a certain combination of goods or services in the market, his? Preference? At the same time? Show? So economists can prove that this combination is bound to maximize utility without quantitative description. In fact, consumers choose to show their preferences in the market, which is to sort the intensity of desire according to their own subjective evaluation system. The subjective evaluation system of consumers recognizes that the utility as the intensity of desire is different in intensity and size, and the default utility can be measured. Otherwise, consumers can't rank the utility of goods and choose goods in the market. Therefore, the consumer subjective evaluation system is the default system that can measure utility. So ordinal utility theory holds that utility is unmeasurable, that is to say, economists can't and don't need to measure utility, but consumers' subjective evaluation system can measure utility. The analysis methods of cardinal utility theory and ordinal utility theory are based on the same understanding of utility, that is, utility can be measured, thus reaching a consistent conclusion on consumer behavior.
? (3) The utility is diminishing and renewable. When consumers continue to consume an item, the utility gained from the increasing consumption units decreases, but after a period of time, the utility of consumers consuming the item can be restored.
2 consumer behavior theory? 1 Hypothesis of consumer behavior theory
? (1) Consumers are rational people. Rationality is that consumers put themselves? Pay? With what? Get? Comparison: When? Pay? In a given time, pursue as much as possible? Get? ; What time? Get? Give time, the less you pursue, the better? Pay? ; When limited resources are faced with a series of given. Pay? With what? Get? , choose the one with the biggest gap. Press this? Rational? What is the so-called actor? Economic man? . Therefore, consumers, as rational economic people, are in line with the conditions of consumer equilibrium when making behavioral decisions.
? (2) Consumers' income and commodity prices are fixed. Under different income conditions, the quantity of goods purchased by consumers is different, and the utility of goods obtained is also different. Only under the same income conditions, it is meaningful to choose the most effective consumption decision among different consumption decisions. Similarly, different commodity prices lead to different optimal consumption combinations. It is meaningful to choose the best consumption combination in different consumption decisions only when the commodity price remains unchanged.
? (3) Consumers' preferences are fixed. Because of the subjectivity of utility, the utility of consumers to the same commodity combination will change with time and place. Therefore, it is meaningful to determine the best consumption decision only when the consumption behavior occurs at a given time and place.
? (4) The marginal utility of unit currency is the same for consumers. Consumers exchange money for goods, in fact, they exchange the utility of money for the utility of goods. Only by assuming that the marginal utility of money remains unchanged can the utility of goods be measured by the utility of money. ? 2 consumer equilibrium
? Using cardinal utility theory and diminishing marginal utility theory in utility theory, we can analyze the consumer equilibrium conditions of cardinal utility theory, that is, consumers should make the ratio of marginal utility to price equal; In other words, the marginal utility brought by the last dollar spent by consumers on each commodity is equal, that is, the marginal utility of money is equal. Assuming that consumers always buy the most effective combination of consumer goods at a certain income level, then consumers' behavior can be transformed into a mathematical problem to solve the conditional extreme value of utility function. Let I be the income of consumers and Pi be the market price of Class I consumer goods, then P 1X 1=P2X2+? Ten PnXn= I is the consumer's budget constraint. Based on this condition, the utility function is obtained: U=u(X 1, X2, Xn) (Note: in the formula, u represents the total utility obtained by consumers in consuming various goods or services in a certain period, and X 1, X2, Xn represents the consumption quantity of n kinds of consumer goods. ), you must:
? Where MUn=du/dXn, that is, the marginal utility of Xn; A is the marginal utility of monetary income. That is, the condition of consumer equilibrium is that consumers should make the ratio of marginal utility to price equal; In other words, the marginal utility brought by the last dollar spent by consumers on each commodity is equal, that is, the marginal utility of money is equal.
? Ordinal utility theory of utility theory analyzes consumer behavior from consumer preference, and then applies indifference curve to details. Using indifference curve, marginal rate of technical substitution and budget line * * *, the equilibrium condition of maximizing consumer utility in ordinal utility theory is derived, that is, the marginal substitution rate of two commodities is equal to the price ratio of two commodities. If a consumer buys two commodities X 1, X2 and gives a utility level UO, the utility function is:
? UO=u(X 1，X 2) ( 1)
? Equation (1) represents a certain utility level, which can be obtained from different combinations of Xl and X2; Since the decrease of X 1 must be compensated by the increase of X2, the function (1) is a curve inclined to the lower right; Called X 1 and X2? Marginal substitution rate? If the total utility remains the same, as the consumption of one commodity increases, the number of another commodity that must be discarded will become less and less. This is the so-called? Law of diminishing marginal substitution rate? ; This law shows that the function (1) is a curve protruding to the origin; In ordinal utility theory, this curve, which reflects the same utility level, inclines downward to the right and bulges toward the origin, is called? Indifference curve? ; If the given budget constraint I=P 1X 1 x P2X2, there must be an indifference curve tangent to it, and the tangent point is the equilibrium point of utility maximization; At the tangent point, the slopes of the two curves are equal, so there are: △X2/△Xl=Pl/P2.
? The significance of this formula is that economics doesn't seem to involve utility and utility measurement, and the same conclusion can be drawn with cardinal utility theory only by consumption variable △X and price p. Although cardinal utility theory and ordinal utility theory use two different analysis methods to analyze consumer behavior, the consumer equilibrium conditions obtained by these two analysis methods are the same. To sum up, consumer behavior theory describes how consumers make consumption decisions. In order to maximize the utility, the established income must be distributed according to the balanced conditions of consumers. Consumer behavior theory is also a model to study consumer behavior, which reflects the basic laws of consumers when making consumption decisions.
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