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Unformatted text preview: s Degree of Substitutability
Goods are perfect complements
when consumption benefits
depend on consuming both
goods in fixed proportions.
3 Perfect complements 2
0 1 2 3 4 5 Right running shoes Predicting Consumer
Individuals maximize their utility when: They are on their budget line. They are on their highest attainable
indifference curve. Their marginal rate of substitution
between the two goods is equal to the
relative price. Pop (six-packs per month) The Best Affordable Point
4 Budget Line
2 4 I0 6 8 I1 1 10 Movies...
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This document was uploaded on 03/14/2014.
- Fall '14