Perfect substitutes will have indifference curves which are
A)Concave
B)Convex
C)Linear (a straight line)
D)L-shaped

Question

Quizplus · Accepted Answer

Perfect substitutes have a constant marginal rate of substitution, meaning that consumers are indifferent between any combination of the two goods as long as they provide the same amount of utility. This leads to linear (straight line) indifference curves. Concave indifference curves indicate diminishing marginal rate of substitution, meaning that consumers require more and more of one good to compensate for a decrease in the other good. Convex indifference curves indicate increasing marginal rate of substitution, meaning that consumers are willing to give up more and more of one good to obtain additional units of the other good. L-shaped indifference curves indicate that the two goods are complements rather than substitutes.

Perfect Substitutes Will Have Indifference Curves Which Are