Suppose that Dell computers and Gateway computers are very close substitutes. Then the indifference curves between Dell computers and Gateway computers are almost straight lines. Is this analysis correct or incorrect? Explain
What will be an ideal response?
The analysis is correct. When two goods are perfect substitutes, their indifference curves are straight lines. A Dell computer and a Gateway computer are very close substitutes, so their indifference curves are close to straight lines.
You might also like to view...
Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell. Which of the following statements is true?
A) The total product becomes negative. B) The average product of the sixth worker is negative. C) The sixth worker is not as skilled as the fifth worker. D) The marginal product of the sixth worker must be negative.
The consumption function has a positive slope while the savings function has a negative slope
a. True b. False Indicate whether the statement is true or false