Applications of Consumer Theory

This chapter consider two applications, labor supply and borrow-saving, based on this Excel workbook. In each case a model is developed and then a comparative statics analysis is performed. There are five videos that follow. The first three deal with labor supply. The latter two with borrowing-saving. Because there is a fair amount of notation needed to develop the models, there are videos that don't have graphs and simply work through the notation and develop a sense of the model.

Time Allocation

The video sets up the notation and the basic model of time allocation for determining labor supply. A simple model is done first and then is extend in some realistic ways.

Labor-Leisure Choice

Comparative statics of the basic model of labor supply as time allocation with preferences that admit a backward bending labor supply curve.

Realistically Complicating the Labor Supply Decision

The basic model is extended by allowing for non-wage income and overtime. Comparative statics is performed with respect to both sorts of variation.

Shifting Income over Time

The video develops the notation and the model for a two period choice problem where the periods denote the present and the future. It considers the problem for both a borrower and a saver and by working through the algebra shows that an increase in the interest rate is like an increase in the price of present consumption for a borrower but is like a fall in the price of future consumption for a saver.

Borrowing-Saving

The video finishes the setup of the model by looking at the rate of time preference and then works through the comparative statics of consumer choice with respect to a change in the interest rate.

Labor Markets and a Bit More on Motivations to Save

An essay aimed at extending the theory via some realistic considerations.

Labor Markets and a bit more on Borrowing-Saving.pdf - Powered by Google Docs via kwout