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In: Economics

A. Explain and illustrate an indifference curve of a complimentgood. with a curveB. state...

A. Explain and illustrate an indifference curve of a compliment good. with a curve

B. state whether true or false. Explain your answer. If price of good x rises holding all other prices and income constant.

- The substitution effect alone will make a consumer buy more of x if x is inferior.

- The income effect will make a consumer buy more of x if x is a normal good.

use graphs in all your explainations

Solutions

Expert Solution


For perfect complement, the Indifference Curves would be 'L' shaped because goods are used in fixed proportion and increasing either of the goods beyond the fixed proportion wouldn't increase the utility of the consumer.

 

Rahul Sunny answered 2 years ago
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