Question

Given below are two statements:
Statement (I): Home-grown grain and purchased grain is an example of perfect substitute.
Statement (II): In case of perfect compliments, the producer either uses the factors in certain fixed proportions or not at all.
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are true.
• B. Both Statement (I) and Statement (II) are false.
• C. Statement (I) is true but Statement (II) is false.
• D. Statement (I) is false but Statement (II) is true.

Hint:

Isoquants for perfect substitutes are straight lines with a constant negative slope, while isoquants for perfect complements are L-shaped, reflecting the rigid fixed-proportion requirement.

Answer 1

The Correct Option is A