M01 broo6651 1e sg c01
they are perfect complements
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Ch03
sol 03
,
sol 03
,
Ch07
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8. What is the difference between ordinal utility and cardinal utility Explain why the assumption
they
are perfect complements
Two goods are
perfect substitutes if the
MRS
of one for the other is a constant number.
In this case
, the slopes of the indifference
curves are constant
, and the indifference curves are therefore linear. If two
goods are perfect complements
, the indifference curves are L-shaped. In this case the consumer wants to consume the two
goods in a fixed proportion
, say one unit of good 1 for everyone unit of good 2. If she has more
of one good than the other
, she does not get any extra satisfaction from the additional units of the first good.
8. What is the difference between ordinal utility and cardinal utility
Explain why the assumption
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