Answer to Question #241724 in Microeconomics for Boss

Question

True or False?

Homothetic tastes are always tastes over essential goods.

Answer 1

False

Explanation -

When there is homothetic taste, all indifference curve has same shape. In case of homotheticity, we can deduce entire preference from a single indifference set.

Perfect substitute goods have homothetic taste but neither of them are essential.