Q.

In the case of two perfect substitutes indifference curve is?

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a

L-shaped

b

C-shaped

c

Straight line

d

U-shaped

answer is A.

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Detailed Solution

Since the two goods are perfect substitutes, the consumer is willing to trade one unit of one good for one unit of the other good at a fixed rate of exchange. Therefore, the indifference curve is a straight line with a constant slope, as the consumer is indifferent between any combination of the two goods along the line.

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