ECON 306 Lecture Notes - Lecture 6: Chocolate Syrup, Chocolate Ice Cream, Pepperoni
28 Sep 2016
School
Department
Course
Professor
Document Summary
Saying that two goods are perfect substitutes for a consumer means he is willing to substitute one good for the other at a constant rate. Lou can choose red pencils (good 1) and/or blue pencils (good 2) He doesn"t care about the color of the pencils he has (that is, to lou, a red pencil is. 9/22 just the same as a blue pencil) Lou always likes to have more pencils. What do the indifference curves look like. Each of (0,9) and (9,0) provides 9 pencils, so they are equally preferred. Saying two goods are perfect complements for a consumer means he always consumes x1+x2=9 them in fixed proportions. Joe can get right shoes (good 1) and/or left shoes (good 2) Always likes to have more pairs of shoes. For every right shoe that he owns he wants a matching left shoe. Joe can freely dispose of any spare shoes.
