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Questions tagged [perfect-complements]

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Relation between complements and substitutes (for multiple goods)

I am a little bit curious about the following problem: If we have multiple goods (at least 3 or more)... And we know that $x_1$ and $x_2$ are substitutes and $x_1$ and $x_3$ are also substitutes, does ...
Athaeneus's user avatar
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1 vote
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Elasticity of substitution meaning

If I computed an elasticity of substitution of f.e. 0.9 between capital and labour, does this implicate that the factors are rather well substitutable or not? Since for 0 they are perfect complements ...
macro123's user avatar
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utility functions of perfect complements

if preferences are described and in this case the preferences are perfect complements, we want to find an utility function that describes the preferences so we can draw an indifference curve. the ...
tessa's user avatar
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How do we show mathematically that the lump sum principle does not apply to perfect complements?

I want to show mathematically that the lump sum principle does not apply to perfect complements. I was able to show it applied with a specific Cobb-Douglas utility function, but I am not sure how to ...
kleinerde's user avatar
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1 answer
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Income effect for complements

Suppose u(x,y)=min(x,2y) and the price of X is 1, the price of Y is 1 and income is $12. If the price of X increases to 2, the income effect is supposed to be -1. I keep getting zero for some reason. ...
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