Consumer Choice During the FIFA World Cup

Answer the following questions to check your understanding of the story.

What is the relationship between FIFA tickets and LA Metro bus tickets for a soccer fan who has no way to reach SoFi Stadium other than by LA Metro bus?

a) Substitutes, but not perfect

b) Complements, but not perfect

c) Perfect complements

d) Perfect substitutes

Wrong! - They are complements, but they are used in a fixed ratio. They are not substitutes because the fan uses both goods together.

Right! - FIFA tickets and LA Metro tickets are perfect complements because each FIFA match ticket requires one roundtrip LA Metro ticket.

What is the shape of this fan's indifference curves for FIFA tickets and LA Metro bus tickets?

a) L-shaped

b) A positively-sloped straight line

c) A negatively-sloped straight line

d) Convex to the origin

Wrong! - An indifference curve slopes upward when one good is a bad. A negatively-sloped straight line represents an indifference curve between perfect substitutes, while a convex curve represents an indifference curve between substitutes.

Well Done! - The indifference curve is L-shaped because the fan pairs each FIFA match ticket with one roundtrip LA Metro ticket. Extra units of either good keep the fan on the same indifference curve.

What is the soccer fan’s best affordable point?

The fan’s best affordable point is ___________.

a) at the corner of the highest attainable indifference curve

b) any point on the budget line

c) the point at which the marginal rate of substitution equals the relative price

d) any point on the highest attainable indifference curve

Wrong! - The best affordable point lies at the corner, neither on the vertical nor horizontal portion. MRS equals the relative price at tangency, but perfect complements have no tangency point. All points on the budget line are affordable, but not all are best.

Good Job! - The best affordable point is at the corner of the highest attainable L-shaped indifference curve. The fan doesn’t want the goods in any ratio other than 1:1.

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