WBCS.LIVE practice question

Two goods are strictly considered perfect substitutes in microeconomics if their indifference curve represents:

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. A right-angled L-shape.
  2. A perfectly straight, downward-sloping line.
  3. A curve highly convex to the origin.
  4. A perfectly horizontal line.

Correct answer and explanation

Correct answer: A perfectly straight, downward-sloping line.

Explanation: āœ… Correct Answer: B) A perfectly straight, downward-sloping line. šŸ“š Explanation: For two goods to be considered perfect substitutes in microeconomics, they must be completely interchangeable in the eyes of the consumer without any loss of utility. Graphically, this relationship is uniquely represented by an indifference curve that is a perfectly straight, downward-sloping line. In this rare scenario, the marginal rate of substitution remains entirely constant across all consumption combinations.