Perfect substitutes A. always have indifference curves with slopes of minus1. B. have horizontal indifference curves. C. always have indifference curves with slopes of 1. D. have fixed rates of trading off one good for another.

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Valdez

23 November, 18:51

Perfect substitutes A. always have indifference curves with slopes of minus1. B. have horizontal indifference curves. C. always have indifference curves with slopes of 1. D. have fixed rates of trading off one good for another.

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Bridget · Answer 1

Option (D) is correct.

Explanation:

Perfect substitute goods are the goods which can be used in place of each other.

Perfect substitutes refers to the goods which are having identical characterstics, features and provide the exactly same level of satisfaction.

The marginal rate of substitution for these perfect substitute goods remains constant which means that the trading of one good for the another good is at a fixed rate.