Budget Constraint, Substitutes, Complements,Indifference Map
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For each case below:
1) State if the goods in the bundles are "perfect substitutes," "perfect complements," or "imperfect substitutes" and 2) Draw 3 curves that could represent an indifference map for a consumer.
Cases:
(A) The bundles includes left shoes and right shoes
(B) The bundles includes 8 ounce frozen orange juice and 12 ounce frozen orange juice
(C) The bundles includes rice and potatoes
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Solution Summary
The answer to this problem explains the Budget Constraint. The references related to the answer are also included.
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(A) The bundles includes left shoes and right shoes
These are perfect complements because a person wears the left shoe with the right shoe. When we draw indifference curves the elbows of the curves are collinear.
(B) The bundles includes ...
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- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
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