A consumer has preferences over two goods: x and y . Three bundles, which all li

Question

A consumer has preferences over two goods: x and y. Three bundles, which all lie on the same indifference curve for this consumer, are shown in the following table.

Bundle

x

y

A

2

8

B

2

2

C

6

2

Which of the following statements regarding these bundles is correct?

The goods are perfect substitutes for this consumer.

The goods are perfect complements for this consumer.

These bundles violate the property that indifference curves are bowed inward.

These bundles violate the property that indifference curves do not cross.

Bundle

x

y

A

2

8

B

2

2

C

6

2

Explanation / Answer

explanation

bundles B and C on the indifference curve show this simple logic shows the consumer is no better off having several X if she has only 2 Y . While bundle A shows this concept the other way round .

Also the theory is that

If two goods are perfect complements then the indifference curves will be L-shaped. Examples of perfect complements include left shoes compared to right shoes: the consumer is no better off having several right shoes if she has only one left shoe - additional right shoes have zero marginal utility without more left shoes, so bundles of goods differing only in the number of right shoes they include - however many - are equally preferred

HENCE THE ANSWER B IS CORRECT

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