Question

Indifference curves for goods x and y can be right angles under A. Perfect substitutes B....

Indifference curves for goods x and y can be right angles under

  • A. Perfect substitutes
  • B. Perfect complements
  • C. diminishing marginal rate of substitution
  • D. rising opportunity costs
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Answer #1

Perfect complements

When indifference curve of goods X and Y is right angle then the goods are prefect complements. Prefect complements are the goods which are always used together to satisfy a particular want and hence are always demanded together. The marginal rate of substitution is zero in case of perfecf complement goods which means good X can't be substituted for good Y as both goods X and Y jointly satisfy the demand. Hence indifference curve for good X and Y can be right angle under perfect complements because of zero marginal rate of substitution.

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