# Tag Info

### Perfect complement preferences in an exchange economy

Set of Pareto Efficient Allocations consists of feasible allocations $((x_J, y_J), (x_D, y_D))$ satisfying $y_J=\displaystyle\frac{x_J}{2}$. Competitive Equilibrium is the price $(p_x, p_y=1)$ ...
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Accepted

### What is the reason behind the demand function of a perfect complement good?

Suppose you have $M=20$ to spend on shoes. Left shoes cost $p_L=5$ and right shoes cost $p_R=5$. A bundle, $(x_L,x_R)$ consists of $x_L$ pairs of left shoes and $x_R$ pairs of right shoes. How would ...
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### Doubt regarding Walrasian equilibrium with complements for both agents

Since demand equals supply holds for every price $p$, this simply means that every $p$ is an equilibrium price. However, the equilibrium allocation that $p$ supports varies with $p$. To be precise, ...
• 9,411
Accepted

### Can a complement good be free or have a fixed cost?

Air is a complement good for a lot of things. If you get no air at all then food, gold and iPhones give you no utility either. And air is free! Except in Spaceballs...
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### Can a complement good be free or have a fixed cost?

Public goods are goods which have a fixed cost and are sometimes free for businesses. Think of police. They patrol streets, protecting businesses premises. Businesses do not pay directly for these ...
• 51
Accepted

### Optimal consumtion bundle of lemons and sugar

Alex's preferences of sugar and lemons can be expressed in form of a utility function as: $U(x,y)=min(x/2,y)$ where $x$ is sugar and $y$ is lemons.This function tells us we need at least 2 spoons ...
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• 9,411
1 vote

### Homogeneity of compensated demand for Leontief (perfect complements) function

Given a utility function $u:\mathbb{R}^L_+\rightarrow\mathbb{R}$, price vector $p\in \mathbb{R}^L_{++}$ and target level of utility $\mu\in\mathbb{R}$, expenditure minimisation problem is defined as ...
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1 vote

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1 vote

### Perfect Complements - Walrasian Equilibrium

Set of feasible allocations is $\mathcal{F}=\{((a_1,b_1),(a_2,b_2))\in\mathbb{R}^2_+\times\mathbb{R}^2_+|a_1+a_2=30 \ \wedge b_1+b_2=20\}$ As can be seen from the picture below, set of competitive ...
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