Does IC tends to be convex Yes When more good is consumed the consumer

Does ic tends to be convex yes when more good is

This preview shows page 13 - 19 out of 42 pages.

Does IC tends to be convex? Yes. When more good is consumed, the consumer willingness to give up fewer units (trade-off one good for another) due to lower (diminishing) satisfaction derives from consuming more food.
Image of page 13

Subscribe to view the full document.

14 of 40 Perfect Substitutes and Perfect Complements perfect substitutes Two goods for which the marginal rate of substitution of one for the other is a constant. perfect complements Two goods for which the MRS is zero or infinite; the indifference curves are shaped as right angles. bad Good for which less is preferred rather than more. Consumers would not choose to purchase them e.g. air pollution, dirty water, etc. BADS
Image of page 14
15 of 40 In ( a ), Bob views orange juice and apple juice as perfect substitutes: He is always indifferent between a glass of one and a glass of the other. Or Longjing green tea, Tie guan yin oolong tea or English breakfast tea (black tea). PERFECT SUBSTITUTES AND PERFECT COMPLEMENTS F IGURE 3.6 In ( b ), Jane views left shoes and right shoes as perfect complements: An additional left shoe gives her no extra satisfaction unless she also obtains the matching right shoe. Or left and right socks or slippers, toothbrush and toothpaste.
Image of page 15

Subscribe to view the full document.