Two products are perfect substitutes if:
A) a consumer is willing to swap one for another at a fixed rate.
B) they are valuable only when used together in fixed proportions.
C) their indifference curves are L-shaped.
D) an increase in the price of one good causes a decrease in the demand for the other good.

Question

Quizplus · Accepted Answer

Perfect substitutes are goods that can be used interchangeably, meaning that a consumer is willing to substitute one product for another at a fixed rate, regardless of their relative prices. This means that if the price of one product increases, consumers will completely switch to the other product, making demand for the second product perfectly elastic.

Two Products Are Perfect Substitutes If