If two goods x and y are perfect complements, then if the price of x falls, the entire change in the demand for x is due to the income effect.

Question

Quizplus · Accepted Answer

If goods x and y are perfect complements, then they are consumed in fixed proportions, regardless of their relative prices. Therefore, a change in the price of x will not affect the quantity demanded of x unless it becomes more affordable relative to the price of y. As a result, any change in the quantity demanded of x must be due to a change in income (i.e., the income effect).

If Two Goods X and Y Are Perfect Complements, Then