The graphs below show indifference curves for various goods. Graph ______ best d
ID: 1249049 • Letter: T
Question
The graphs below show indifference curves for various goods. Graph ______ best describes the pair of goods baseballs and baseball bats. Graph _____ best describes the pair of goods desktop computers and laptop computers. The marginal rate of substitution along the indifference curves in _____ decreases at a slower rate than in _____ as we increase consumption of the good measured on x-axis and decrease consumption of the good measured on the y-axis. 3; 1; graph 3; graphs 1 and 3; 3; graph 1; graph 3 2; 1; graph 1; graph 3 2; 3; graph 3; graphs 1 and 2Explanation / Answer
Baseballs and bats are compliments while desktops and laptops are substitutes. Graph 1 illustrates a perfect complementary relationship. Notice that utility only increases if both Good Y AND Good X increase. If only one or the other increases, we stay on the same indifference curve. Graph 2 illustrates imperfect complements. Graph 3 illustrates substitutes. Since there is no answer beginning with "1," we can guess that the question writer does not think that baseballs and bats are perfect compliments, so they must be imperfect complements. So far, we know that the correct answer must begin with 2,3. That is enough to tell us that the correct answer is D. But there is more to learn. Let's continue. The Marginal Rate of Substitution (MRS) is the slope of the indifference curve. Here, we see that the slope of the indifference curve in Graph 3 decreases slower than the slope of the indifference curve in Graph 2. The slope of the indifference curve in graph 1 is negative infinity then zero after the kink. So, the slope of the indifference curve in Graph 3 decreases slower than the slopes of the indifference curves in Graphs 1 and 2. The correct answer is D, as we knew from before.
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