alleryWhen two goods are perfect substitutes, their indifference curves take the shape of:
AL-shaped right-angled lines
Bstraight downward-sloping lines
Ccurves concave to the origin
Dcurves convex to the origin
Answer & Solution
Correct answer: B. straight downward-sloping lines
1. Perfect substitutes can be exchanged at a constant rate, so MRS is constant.
2. A constant slope gives straight, parallel, downward-sloping indifference lines.
3. L-shaped curves describe perfect complements, and ordinary convex or concave curves do not, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.16_
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