Special Utility Functions
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Conditions of Perfect Complements
- Perfect Complements takes the form .
- Indifference curve is L-shaped, with the vertex of the L-shape passing through the line
- Interpretation is left shoe-right shoe
- When doing optimization problems, we always equate the two components in the min{. , .}. That is ax_{1} = bx_{2}. When ax_{1} = bx_{2}, we are not using any extra resources, and the utility (or production function) is u = ax_{1} = bx_{2}.
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