// LabDeriveDemandCurveSpecs.swift. 1/11/2020. // NB: Initial slider values: Presently does nothing import Foundation class LabDeriveDemLabSupSpecs { let strLabDeriveDemMarshallianSpecs :String = """ `` Lab Specs Good // 0: Type of problem: Good, Labor // Utility Parameters X Y // 1: Good X and good Y names 0.1 0.9 0.05 0.4 // 2: Good Y alpha specs 0.0 5.0 0.2 0.8 // 3: Elasticity of substitution specs // Price and income parameters Px Py Inc // 4: Good price and income names 1.00 5.00 .50 2.00 // 5: Price of X slider specs .50 5.00 .50 1.00 // 6: Price of Y slider specs 10.00 20.00 2.50 20.00 // 7: Income slider specs // Utility maximizing graph parameters 0 0 12 20 // 8: Utility max graph data axis range: x0 y0 x1 y1 X Y // 9: Utility max graph names 0 0 12 5 // 10: Demand curve graph data axis range: x0 y0 x1 y1 X Px // 11: Demand curve graph names // CES initial prices 1.00 .50 // 12: Used to setup CES function `` Prob Specs ` ******** Problem 0 Start Screen 1 - The Marshallian Demand Curve and Utility Maximization // 0: Title // Initial point or curve specs T // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T F F F // 3: Visibility: T or F T F F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show how the Marshallian demand curve results from utility maximization.`BLK The upper graph plots the income constraint and depicts the utility maximizing bundle along with its associated indifference curve. The lower graph will plot the Marshallian demand curve for good X. The vertical scrollbar immediately to the left of lower graph specifies the price of good X. Move the scrollbar up to increase the price of good X. As you do, the green budget line rotates around the its Y-intercept. The initial budget line and utility maximizing indifference curves now appear on the graph as light green and light red. The new ones appear as darker red. Move this scrollbar up and down to change its price thereby tracing out the demand curve. Observe how changing the price of X affects the budget line and utility maximizing bundle of goods X and Y which in turn results in a movement along the Marshallian demand curve. ` Prob End ` ******** Problem 1 Start Screen 2 - Changes in Household Income and Shifts in the Marshallian Demand Curve // 0: Title // Initial point or curve specs E // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L B // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Neither // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T F F F // 3: Visibility: T or F T F F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show how the utility maximizing bundle and the Marshallian demand curve are affected when the household's income changes.`BLK Use the horizontal income scrollbar to the left of the upper graph to decrease income from $20.00 to $10.00. `IND`BLDQuestion:`BLD When the price of good X remains at $2.00, how are the following affected: `0x2022 budget line? `0x2022 utility maximizing bundle? `0x2022 quantity of good X demanded? `0x2022 entire demand curve? ` Prob End ` ******** Problem 2 Start Screen 3 - Changes in the Price of Good Y and Shifts in the Marshallian Demand Curve // 0: Title // Initial point or curve specs E // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B B L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T F F F // 3: Visibility: T or F T F F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or F // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show how the utility maximizing bundle and the Marshallian demand curve are affected when the price of good Y changes.`BLK Use the horizontal price of Y (Py) scrollbar to the left of the upper graph to increase price of good Y from $1.00 to $4.00. `IND`BLDQuestion:`BLD When the price of good X remains at $2.00, how are the following affected: `0x2022 budget line? `0x2022 utility maximizing bundle? `0x2022 quantity of good X demanded? `0x2022 entire demand curve? ` Prob End """ let strLabDeriveDemHicksianSpecs :String = """ `` Lab Specs Good // 0: Type of problem: Good, Labor // Utility Parameters X Y // 1: Good X and good Y names 0.1 0.9 0.05 0.4 // 2: Good Y alpha specs 0.0 5.0 0.2 0.8 // 3: Elasticity of substitution specs // Price and income parameters Px Py Util // 4: Good price and income names 1.00 5.00 .50 2.00 // 5: Price of X slider specs .50 4.00 .50 1.00 // 6: Price of Y slider specs 5.00 9.00 1.00 7.00 // 7: Income/Utility slider specs // Utility maximizing graph parameters 0 0 12 20 // 8: Utility max graph data axis range: x0 y0 x1 y1 X Y // 9: Utility max graph names 0 0 12 5 // 10: Demand curve graph data axis range: x0 y0 x1 y1 X Px // 11: Demand curve graph names // CES initial prices 1.50 1.00 // 12: Used to setup CES function `` Prob Specs ` ******** Problem 0 Start Screen 1 - Hicksian Demand Curve and Expenditure Minimization // 0: Title // Initial point or curve specs T // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Neither // Radiobutton and checkbox initialization: // Trace or Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F T F F // 3: Visibility: T or F F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show how the Hicksian demand curve results from expenditure minimization.`BLK The upper graph illustrates the expenditure minimizing bundle required to generate a specified level of utility. The red indifference curve represents the level of utility, the the green isoexpenditure curve, and black bundle the expenditure minimizing bundle. The lower graph will plot the Hicksian demand curve for good X. The vertical scrollbar immediately to the left of lower graph specifies the price of good X. Move the scrollbar up to increase the price of good X. As you do, the green minimizing isoexpenditure curve rotates around the red indifference curve. The initial expenditure minimizing curve and cost minimizing bundle appear as light green and gray. The new ones appear as darker red. Use the vertical price of X scrollbar to trace out the Hicksian demand curve. Observe how changing the price of good X affects the expenditure minimizing bundle needed to generate the specified level of utility which in turn determines the Hicksian quantity demanded. ` Prob End ` ******** Problem 1 Start Screen 2 - Changes in Household Utility and Shifts in the Hicksian Demand Curve // 0: Title // Initial point or curve specs E // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L B // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Neither // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F T F F // 3: Visibility: T or F F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show how the expenditure minimizing bundle and the Hicksian demand curve are affected by changes household's utility.`BLK Use the horizontal utility scrollbar to the left of the upper graph to increase utility from 7.00 to 10.00. `IND`BLDQuestion:`BLDWhen the price of good X remains at $2.00, how are the following affected: `0x2022 minimizing isoexpenditure curve? `0x2022 expenditure minimizing bundle? `0x2022 quantity of good X demanded? `0x2022 entire demand curve? ` Prob End ` ******** Problem 2 Start Screen 3 - Changes in the Price of Good Y and Shifts in the Hicksian Demand Curve // 0: Title // Initial point or curve specs // Initial point or curve specs E // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B B L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F T F F // 3: Visibility: T or F F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show how the expenditure minimizing bundle and the Hicksian demand curve are affected when the price of good Y changes.`BLK Use the horizontal price of Y (Py) scrollbar to the left of the upper graph to increase price of good Y from $1.00 to $4.00. `IND`BLDQuestion:`BLDWhen the price of good X remains at $2.00, how are the following affected: `0x2022 minimizing isoexpenditure curve? `0x2022 expenditure minimizing bundle? `0x2022 quantity of good X demanded? `0x2022 entire demand curve? ` Prob End """ let strLabDeriveDemConsSurSpecs :String = """ `` Lab Specs Good // 0: Type of problem: Good, Labor // Utility Parameters X Y // 1: Good X and good Y names 0.1 0.9 0.05 0.4 // 2: Good Y alpha specs 0.0 5.0 0.2 0.8 // 3: Elasticity of substitution specs // Price and income parameters Px Py Inc // 4: Good price and income names 1.00 5.00 .50 2.00 // 5: Price of X slider specs .50 4.00 .50 1.00 // 6: Price of Y slider specs 10.00 20.00 2.50 20.00 // 7: Income slider specs // Utility maximizing graph parameters 0 0 12 20 // 8: Utility max graph data axis range: x0 y0 x1 y1 X Y // 9: Utility max graph names 0 0 12 5 // 10: Demand curve graph data axis range: x0 y0 x1 y1 X Px // 11: Demand curve graph names // CES initial prices 1.00 .50 // 12: Used to setup CES function `` Prob Specs ` ******** Problem 0 Start Screen 1 - Introduction to Compensating Variation // 0: Title // Initial point or curve specs C // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F T F F // 3: Visibility: T or F F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T F // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Quantify in terms of dollars, how a change in price of a good affects a household's welfare. Compensating variation (CV) is one way of doing so.`BLK `BLDDefinition:`BLD Compensated variation (CV) equals the additional income the household requires to remain just as well off AFTER a price changes. Initially, the price of good X equals $2.00, the price of good Y equals $1.00, and the household's income equals $20.00. Use the vertical price of X (Px) scrollbar, located to right, to increase the good X price from its $2.00 initial price to a new price of $4.00. `IND`BLDQuestion:`BLD Why does the green budget line rotate around its Y-intercept? `INDThe initial utility maximizing information remains on the graph, but now appears in lighter colors. Now let us interpret the gray and black bundles appearing on the graph. `BLDGray bundle:`BLD Initial utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $2.00. `0x2022 Utility: 6.73. `BLDBlack bundle:`BLD New utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. Obviously, the increased good X price reduces the household's utility. Suppose that you wish to compensate the household for its utility loss by giving the household additional income AFTER the good X price increases. `BLDQuestion:`BLD How much additional income must you give the household? `BLDAnswer`BLD: The compensated variation. To determine the compensated variation focus attention on the horizontal scrollbar beneath the graph, the compensated income (Comp Inc) scrollbar. Gradually, move the scrollbar to the right. A purple budget line now appears. It accounts for the household's initial income, $20.00, plus the compensated income you added when you moved the scrollbar. Note that the purple budget line reflects the new good X price, $4.00, because it is parallel to the new green budget line. Continue to move the compensated income scrollbar until it just touches the initial light red indifference curve. The purple budget line now reflects the household's initial income, $20.00, plus the compensated income, $10.66, for a total of $30.66. Now interpret the gray and purple bundles. `BLDGray bundle:`BLD Initial utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $2.00. `0x2022 Utility: 6.73. `BLDPurple bundle:`BLD Utility maximizing bundle after receiving $10.66 of additional income (compensated income). `0x2022 Net Income: $20.00+$10.66=$30.66. `0x2022 Good X price: $4.00. `0x2022 Utility: 6.73. `BLDNB: The gray and purple bundles generate the same level of utility.`BLD The household requires $10.66 of aditional income AFTER the price of X increases by $4.00 to remain just as well off. Hence, the compensated variation equals $10.66. ` Prob End ` ******** Problem 1 Start Screen 2 - Compensating Variation: A Homespun Example // 0: Title // Initial point or curve specs C // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F T F F // 3: Visibility: T or F F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T F // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Quantify in terms of dollars, how a change in price of a good affects a household's welfare. Compensating variation (CV) is one way of doing so.`BLK `BLDDefinition:`BLD Compensated variation (CV) equals the additional income the household requires to remain just as well off AFTER a price changes. A homespun example allows us to make this concept a little more intuitive. Suppose that a benevolent grandma provides you with $20.00 a day to spend just for having fun. You use the $20.00 to buy beer and pizza. Good X represents beer and good Y pizza. Initially, the price of beer is $2.00 and pizza $1.00. You buy 6 beers and 8 slices of pizza a day to maximize your utility. This is represented on the graph by the black bundle. But now the price of beer increases from $2.00 to $4.00. Adjust the price scrollbar accordingly. You can no longer afford 6 beers and 8 slices. Now, the best way you can spend the $20.00 is to buy 3.16 beers and 7.34 slices as illustrate by the new black bundle. The initial utility maximizing information remains on the graph, but now appears in lighter colors. Now let us interpret the gray and black bundles appearing on the graph. `BLDGray bundle:`BLD Initial utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $2.00. `0x2022 Utility: 6.73. `BLDBlack bundle:`BLD New utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. Next, recall your benevolent grandma. She wants to give you more dollars so that you will not be hurt by the higher beer price. `BLDQuestion:`BLD Instead of giving you $20.00, how many additional dollars should she now give you? `BLDAnswer:`BLD Just $10.66. Adjust the horizontal compensated income (Comp Inc) scrollbar to convince yourself that this answer is correct. Then we compare the gray and purple bundles. `BLDGray bundle:`BLD Initial utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $2.00. `0x2022 Utility: 6.73. `BLDPurple bundle:`BLD Utility maximizing bundle after receiving $10.66 of additional income (compensated income) from grandma. `0x2022 Net Income: $20.00+$10.66=$30.66. `0x2022 Good X price: $4.00. `0x2022 Utility: 6.73. `BLDNB: The gray and purple bundles generate the same level of utility.`BLD With $10.66 of additional income you would now purchase the purple bundle and would be just as well off as you were initially. The compensated variation equals $10.66. ` Prob End ` ******** Problem 2 Start Screen 3 - Compensating Variation and Hicksian Demand Curves // 0: Title // Initial point or curve specs C // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F T F T // 3: Visibility: T or F F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show that the compensating variation (CV) equals the change in consumer surplus of the Hicksian demand curve based on the INITIAL level of utility.`BLK The red demand curve in the lower graph is the Hicksian demand curve based on the initial level of utility, 6.73 units. Initially, the household's income equals $20.00 and the price of good X equals $2.00. Use the vertical price of X scrollbar to increase the good X price from its $2.00 initial price to a new price of $4.00. Recall that the purple and gray bundles, the two bundles that lie on the INITIAL light red indifference curve, were key in calculating the compensated variation. `BLDGray bundle:`BLD Initial utility maximizing bundle. `0x2022 Income: $20.00. `0x2022 Good X price: $2.00. `0x2022 Utility: 6.73. `BLDBlack bundle:`BLD Utility maximizing bundle after receiving $10.66 of compensated income. `0x2022 Net Income: $20.00+$10.66=$30.66. `0x2022 Good X price: $4.00. `0x2022 Utility: 6.73. The compensated variation equals $10.66. After the increase in the good X price, you must be given $10.66 to compensate you for the price increase. `BLDClaim:`BLD The compensated variation equals the change in consumer surplus of the Hicksian demand curve based on the INITIAL level of utility. To justify this claim, check the consumer surplus button that lies immediately above this text box. What does the change in consumer surplus equal? Compare it with the compensating variation. ` Prob End ` ******** Problem 3 Start Screen 4 - Introduction to Equivalent Variation // 0: Title // Initial point or curve specs C // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F F T F // 3: Visibility: T or F F F T F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T F // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Quantify in terms of dollars, how a change in price of a good affects a household's welfare. Equivalent variation (EV) is a second way of doing so.`BLK `BLDDefinition:`BLD Equivalent variation (EV) equals the most income the household would sacrifice to forestall the increase in the good X price. To motivate equivalent variation (EV) suppose that the price of good X sold by brick and mortar stores just increased from $2.00 to $4.00. Use the vertical price of X scrollbar, located to the right, to increase the good X price from its $2.00 initial price to a new price of $4.00. `IND`BLDQuestion:`BLD Why does the green budget line rotate around the Y-intercept? `INDThe initial utility maximizing information remains on the graph, but now appears in lighter colors. Now let us interpret the gray and black bundles appearing on the graph. `BLDGray bundle:`BLD Utility maximizing bundle when you buy good X from the brick and mortar store at the initial $1.00 price. `0x2022 Income: $20.00. `0x2022 Good X price: $2.00. `0x2022 Utility: 6.73. `BLDBlack bundle:`BLD Utility maximizing bundle when you buy good X from the brick and mortar store at the new $4.00 price. `0x2022 Income: $20.00. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. Fortunately, you have another option: You can still purchase good X from Amazon at the old $2.00 price IF you join Amazon Prime by paying the membership fee. `BLDQuestion:`BLD Should you buy the good from a brick and mortar store or join Amazon Prime? `BLDAnswer:`BLD It depends on Amazon's membership fee. We now focus on the membership fee. The horizontal scrollbar immediately beneath the indifference curve diagram, the fee scrollbar, allows you to illustrate the effect of the fee. Gradually slide the fee scrollbar right. A purple budget line now appears. It accounts for the household's initial income less a membership fee you pay to join Amazon Prime. Note that the purple budget line reflects the initial good X price, $2.00, because it is parallel to the initial light green budget line. `BLDQuestions:`BLD Would you join the Amazon Prime if the membership fee were `0x2022 $5.00? Explain. `0x2022 $10.00? Explain. `BLDQuestion:`BLD At what fee would you be indifferent about joining Amazon Prime? Use the fee scrollbar to find the answer. `BLDAnswer:`BLD A purple bundle appears on the diagram when you select the correct fee. You would be indifferent about joining Amazon Prime if the membership fee were $6.95? Compare the black and purple bundles, the two bundles that lie on the new red indifference curve: `BLDBlack bundle:`BLD Your utility maximizing bundle when you buy good X from a brick and mortar store. `0x2022 Income: $20.00. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. `BLDPurple bundle:`BLD Your utility maximizing bundle when you join Amazon Prime after paying a $6.52 membership fee and purchase good X at Amazon. `0x2022 Net income: $20.00 - $6.95 = $13.05. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. Now, review the definition of equivalent variation. `BLDDefinition:`BLD Equivalent variation (EV) equals the most income the household would sacrifice to forestall the increase in the good X price. The purple bundle reveals that the highest joining fee you would be willing to pay Amazon Prime is $6.95 The equivalent variation (EV) equals $6.95. ` Prob End ` ******** Problem 4 Start Screen 5 - Equivalent Variation and Hicksian Demand Curves // 0: Title // Initial point or curve specs C // 1: Problem mode: // Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, F F T T // 3: Visibility: T or F F F T F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show that the equivalent variation (EV) equals the change in consumer surplus derived the Hicksian demand curve based on the NEW level of utility.`BLK NB: The red demand curve in the lower graph is the Hicksian demand curve. Recall that initially your benevolent gave you $20.00 and the price of good X equals $2.00. Use the vertical price of X scrollbar to increase the good X price from its $1.00 initial price to a new price of $4.00. The Hicksian demand curve shifts left as you increase the good X price because the Hicksian demand curve is based on the new level of utility. When the new price is $4.00, the Hicksian demand curve is based on the NEW level of utility, 4.39. Now, recall that the purple and black bundles, the two bundles lying on the new red indifference curve, were key in calculating the equivalent variation. `BLDBlack bundle:`BLD Your utility maximizing bundle when you buy good X from a brick and mortar store. `0x2022 Income: $20.00. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. `BLDPurple bundle:`BLD Your utility maximizing bundle when you join Amazon Prime after paying a $6.52 membership fee and purchase good X at Amazon. `0x2022 Net income: $20.00 - $6.95 = $13.05. `0x2022 Good X price: $4.00. `0x2022 Utility: 4.39. The equivalent variation equals $6.95. `BLDClaim:`BLD The equivalent variation equals the change in consumer surplus of the Hicksian demand curve based on the NEW level of utility. To justify this claim, check the consumer surplus bundle that lies immediately above this text box. What does the change in consumer surplus equal? Compare it with the equivalent variation. ` Prob End ` ******** Problem 5 Start Screen 6 - Marshallian Demand Curve and Consumer Surplus. // 0: Title // Initial point or curve specs C // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility N N B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Niether // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T F F T // 3: Visibility: T or F T F F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Compare consumer surplus calculated using the Marshallian demand curve with the compensating variation and equivalent variation.`BLK Use the vertical price of X scrollbar to increase the good X price from its $2.00 initial price to a new price of $4.00. NB: Note that the red demand curve is the Marshallian demand curve. Check the consumer surplus bundle that lies immediately above this text box. What does the change in consumer surplus based on the Marshallian demand curve equal? How does it compare to compensated variation and equivalent variation? ` Prob End """ let strDeriveLabSupplySpecs :String = """ `` Lab Specs Work // 0: Type of problem // Utility Parameters Leis Cons // 1: Good X and good Y names .1 .9 0.05 .7 // 2: Good X alpha specs .0 5.0 .2 1.6 // 3: Elasticity of substitution specs // LabDeriveDemLaborSupSpecs.txt. 4/25/2020. // Price and income parameters w PropTax LSTax // 4: Good price and income names 2.00 25.00 .25 15.00 // 5: Wage specs -.50 .50 .10 .00 // 6: Proportional tax specs -100.00 100.00 50.00 .00 // 7: Lump sum tax specs // Utility maximizing graph parameters 0 0 25 800 // 8: Utility max graph data axis range: x0 y0 x1 y1 Leis Cons // 9: Utility max graph names 0 0 25 25 // 10: Demand curve graph data axis range: x0 y0 x1 y1 Leis w // 11: Demand curve graph names // CES initial prices 15.00 .00 // 12: Used to setup CES function (2nd value not relevant here.) `` Prob Specs ` ******** Problem 0 Start Screen 1 - The Labor Supply Curve: Connect Utility Maximization and Labor Supply // 0: Title // Show initial utility max and demand points T // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility: utility alphas, elast of sub, price X, price Y N L B L L // 2: Utility alphas, Elast of sub, // Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Neither // Radiobutton and checkbox initialization: // Trace or Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T F F F // 3: Visibility: T or F T F F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show that when the elasticity of substitution is greater than 1.0, the labor supply curve is upward sloping.`BLK Move the wage slider to trace out the demand curve for leisure and the supply curve for labor. Observe how the utility maximizing quantity of leisure and the quantity of leisure demanded are related. Note that the elasticity of substitution is greater than 1.0. Is the labor supply curve upward sloping or downward sloping? ` Prob End ` ******** Problem 1 Start Screen 2 - The Labor Supply Curve: Effect of the Elastic of Substitution // 0: Title // Show initial utility max and demand points T // 1: Problem mode: Trace curve, Entire curve, Consumer surplus // Slider visibility: utility alphas, elast of sub, price X, price Y N B B L L // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Neither // Radiobutton and checkbox initialization: // Trace or Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T T F F // 3: Visibility: T or F T F F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Show that when the elasticity of substitution is less than 1.0, the labor supply curve is upward sloping.`BLK Use the elasticity of substitution scrollbar to reduce its value to be less than 1.0. Is the labor supply curve upward sloping or downward sloping? ` Prob End ` ******** Problem 2 Start Screen 3 - The Labor Supply Curve: Effect of Taxes // 0. Title // Show initial utility max and demand points T T // 1: Show entire initial curve // Slider visibility: utility alphas, elast of sub, price X, price Y B B B B B // 2: Utility alphas, Elast of sub, Price X, Price Y, Income // B: Both scrollbar and label // S: Scrollbar only // L: Label only // N: Neither // Radiobutton and checkbox initialization: // Trace of Entire Curve mode: Marshallian, Hicksian, Not used, // Consumer surplus checkbox // Consumer surplus mode: Marshallian, Compensating variation, Equivalent variation, // Consumer surplus checkbox, T T F // 3: Visibility: T or F T F F // 4: Select: T or F // Presently does nothing xxxx // 5: // Graph visibility: Indifference curve diagram, Demand curve T T // 6: T or T // Text ` Text Start // 7: Text `RED`BLDObjective:`BLD Illustrate the effect of a proportional tax and lump sum tax on the supply curve for labor.`BLK ` Prob End """ }