Practice question · Sort into groups
Sort these goods into perfect substitutes vs perfect complements.
Groups: Perfect substitutes · Perfect complements
- Hot dog and bun
- One-euro coin and two 50-cent coins
- Computer and monitor
- Coke and Pepsi (to some consumers)
- Left shoe and right shoe
- Blue pen and black pen
Hints
- Ask whether one can replace the other or requires it.
- Fixed proportions signal the second category.
Show the answer
Perfect substitutes: Coke and Pepsi (to some consumers), Blue pen and black pen, One-euro coin and two 50-cent coins
Perfect complements: Left shoe and right shoe, Computer and monitor, Hot dog and bun
Why
Substitutes: one replaces the other at a fixed rate. Complements: useless without the other, consumed in fixed proportions.
Practise Consumer Preferences
The app has 8 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Consumer Preferences
- Match each preference axiom to its meaning.
- The transitivity axiom says that preferring A to B and B to C forces preferring A to C. Why does violating it…
- The marginal rate of substitution typically diminishes as you move along an indifference curve to the right.
- Convex preferences mean averages are preferred to extremes, and the indifference curves bow inward. Why is…