Answer to Question #269561 in Microeconomics for Linh

Question

1) For the case of perfect complements, draw a budget line and a family of ICs. What is the

consumer’s most preferred market basket?

2) For the case of perfect substitutes, draw a budget line and a family of ICs. What is the

consumer’s most preferred market basket?(Hint: The ICs, which are straight lines in this

case, can have a different slope than the budget line)

Answer 1

a) Budget line and a family of ICs for perfect complements

 The consumer’s most preferred market basket is the one indicated as optimal choice since it provides the highest level of utility.

b)Budget line and a family of ICs for perfect substitutes

 The consumer’s most preferred market basket is the one indicated as optimal choice since it provides the highest level of utility.