New Enroll for RBI, PFRDA & NABARD Intro Class! April 18 at 9:15 PM

    Question

    For which preferences the income offer curve

    and the price offer curve are equal?
    A Convex Correct Answer Incorrect Answer
    B Concave Correct Answer Incorrect Answer
    C Perfect substitute Correct Answer Incorrect Answer
    D Perfect complements Correct Answer Incorrect Answer
    E None Correct Answer Incorrect Answer

    Solution

    Income offer curve is a line that depicts the optimal choice of two goods at different levels of income at constant prices.

    Price offer curve is a line that depicts the optimal choice of two goods as price of 1 good change holding the price of other good and income fixed.

    For perfect complements preferences, the two curves are the same.

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