1. Chapter 5 Applying Consumer Theory

2. © 2004 Pearson Addison-Wesley. All rights reserved5-2 Figure 5.1 Deriving an Individual’s Demand Curve

3. © 2004 Pearson Addison-Wesley. All rights reserved Figure 5.2 Effect of a Budget Increase on an Individual’s Demand Curve

4. Page 112 Solved Problem 5.1

5. © 2004 Pearson Addison-Wesley. All rights reserved5-5 Figure 5.3 Income-Consumption Curves and Income Elasticities

6. © 2004 Pearson Addison-Wesley. All rights reserved Figure 5.4 A Good that is Both Inferior and Normal

7. © 2004 Pearson Addison-Wesley. All rights reserved5-7 Application (Page 117) Income Elasticities of Demand for Cars

8. © 2004 Pearson Addison-Wesley. All rights reserved5-8 Figure 5.5 Substitution and Income Effects with Normal Goods

9. © 2004 Pearson Addison-Wesley. All rights reserved5-9 Figure 5.6 Giffen Good

10. © 2004 Pearson Addison-Wesley. All rights reserved5-10 Q/UT AOG&S 0 X M I A B Inferior Good -- Not Giffen

11. © 2004 Pearson Addison-Wesley. All rights reserved5-11 Q/UT AOG&S 0 X M I A B

12. © 2004 Pearson Addison-Wesley. All rights reserved5-12 Q/UT AOG&S 0 X M I A BC

13. © 2004 Pearson Addison-Wesley. All rights reserved5-13 Q/UT AOG&S 0 X M I A BC D E X’ N

14. © 2004 Pearson Addison-Wesley. All rights reserved5-14 Q/UT AOG&S 0 X M I A BC D E X’ Substitution Effect N

15. © 2004 Pearson Addison-Wesley. All rights reserved5-15 Q/UT AOG&S 0 X M I A BC D E X’X” Substitution Effect N P I’

16. © 2004 Pearson Addison-Wesley. All rights reserved5-16 Q/UT AOG&S 0 X M I A BC D E X’X” Substitution Effect N P Income Effect I’

17. © 2004 Pearson Addison-Wesley. All rights reserved5-17 Q/UT AOG&S 0 X M I A BC D E X’X” Substitution Effect N P Income Effect Total Effect I’

18. © 2004 Pearson Addison-Wesley. All rights reserved5-18 Figure 5.7 The Consumer Price Index

19. © 2004 Pearson Addison-Wesley. All rights reserved5-19 Table 5.1 Cost-of-Living Adjustments

20. © 2004 Pearson Addison-Wesley. All rights reserved Figure 5.8 Demand for Leisure

21. © 2004 Pearson Addison-Wesley. All rights reserved5-21 Figure 5.9 Supply Curve of Labor

22. © 2004 Pearson Addison-Wesley. All rights reserved5-22 Figure 5.10 Income and Substitution Effects of a Wage Change

23. © 2004 Pearson Addison-Wesley. All rights reserved5-23 Page 135 Solved Problem 5.3

24. © 2004 Pearson Addison-Wesley. All rights reserved5-24 Page 135 Solved Problem 5.3

25. © 2004 Pearson Addison-Wesley. All rights reserved5-25 Application (Page 136) Leisure- Income Choices of Textile Workers

26. © 2004 Pearson Addison-Wesley. All rights reserved5-26 Figure 5.11a Labor Supply Curve that Slopes Upward and then Bends Backward

27. © 2004 Pearson Addison-Wesley. All rights reserved5-27 Figure 5.11b Labor Supply Curve that Slopes Upward and then Bends Backward

28. © 2004 Pearson Addison-Wesley. All rights reserved5-28 Figure 5.12 Relationship of Tax Revenue to Tax Rates

29. Cross-Chapter Analysis (Page 146) Child-Care Subsidies