Asked by
Dwayne Teamer
on Nov 16, 2024
Verified
If goods A and B are perfect substitutes, then the marginal rate of substitution of good A for good B is constant.
Marginal Rate
This refers to the rate at which one variable changes with respect to a change in another variable, commonly used in economics and finance to describe rates of substitution and transformation.
Perfect Substitutes
Two goods with straight-line indifference curves.
Constant
A fixed value in mathematics, physics, and other sciences, that does not change under specified conditions.
- Understand the economic rationale behind the shapes of indifference curves for different types of goods (perfect substitutes, perfect complements, inferior goods, normal goods, Giffen goods).
Verified Answer
JB
Learning Objectives
- Understand the economic rationale behind the shapes of indifference curves for different types of goods (perfect substitutes, perfect complements, inferior goods, normal goods, Giffen goods).
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