Asked by
Heides tination
on Oct 25, 2024Verified
Two goods for which the marginal rate of substitution is zero or infinite are:
A) perfect substitutes.
B) perfect complements.
C) goods considered "bads."
D) substitutes and complements at the same time.
Marginal Rate of Substitution
The rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of utility or satisfaction.
Perfect Substitutes
Two goods for which consumers are completely indifferent as to which to consume, meaning the consumption of one good can fully replace consumption of the other.
Perfect Complements
Goods that are often consumed together in fixed proportions, such that demand for one increases demand for the other.
- Understand the concept of perfect substitutes and perfect complements in consumer preferences.
Verified Answer
MH
Learning Objectives
- Understand the concept of perfect substitutes and perfect complements in consumer preferences.