7d. Perfect Substitutes: Preferences and Optimal Choice

In this video, I demonstrate how to draw indifference curves when a consumer has perfect substitutes preferences. I also demonstrate how to find the optimal bundle when indifference curves do not take their usual convex-to-the-origin shape.
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[@heckler73]

Let's get ready to rumble, eh? That was a good vid. I always think about indifference curves in an abstract, exponentially decaying way; with no tangible reference (or origin). Using the packs and cases scenario actually made it more comprehensible

[@annekarinstensland8274]

Really helpful video! Helped me a lot studying for my exam in microeconomics :)

[@zF15z]

Nice vid, learning this currently in my intermediate micro class, useful for revision =]

[@salonisingla1665]

Yes, this was amazingly helpful! Thank you!!!

[@qasimmahmood4779]

This was really clear and insightful, thank you! I do have a question. There is a certain situation where we can apply this to intertemporal choice - consumption in period 1 is a certain constant value and consumption in period 2 is 0. The MRS of the equation happens to be equal to -1 which leads to the interest rate being equal to 0. This implies that the preferences for consumptions in both periods are perfect substitutes - what would be the optimal consumption for each period? Would he consume equal amounts in each (interior solution) or would he consume all of it in period 1? I'd really appreciate any help.

[@froboy32]

what about perfect complements?

[@barovierkevinallybose1040]

Would this type of consumer ever leave the market with some unspent budget?

[@AA-jk1ck]

Really helpful! Thank you :)

[@ankitkanojia1968]

Well done sir❤️

[@allendowe6339]

How are they perfect substitutes if they one has more value than the other one? Maybe the one being more expensive has like a higher value being it comes in bulk or something? can you still find a consumer optimum if they are of equal price in terms of unit cans?