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EXAMPLE 4.3 Suppose Albert always uses exactly two pats of butter on each piece of toast. If toast costs 0.10/slice and butter costs 0.20/pat, nd Albert's best affordable bundle if he has 12/mo to spend on toast and butter. For Albert, butter and toast are perfect complements, which means that his indifference curves will be Lshaped. 11 in Figure 4.2!! is the set of all buttertoast combinations that provide the same satisfaction as 20 pats of butter and 10 slices of toast. Because Albert wants exactly two pats of butter for every slice of toast he is indifferent between the bundle (20, 10) and the bundles (20, 20) or (40, 10). The extra toast or butter is unwanted on its own. Note that this means the more-isbetter property is not satised. In the same diagram, Albert's budget constraint is shown as B. The slope of his budget constraint is 2. The slope of his indifference curve is either innite or zero. In interpretation, if he has an excess of toast (e.g. bundle (20, 20)) he would need an innite amount of toast to compensate for a little less butter. If he has a shortage of toast (e.g. bundle (40, 10)) he would need no toast to compensate for a little less butter. 11 12 120 B Toast (slices/ mo) 20 10 20 40 60 Butter (pats/mo) FIGURE 4.20 Equilibrium with perfect complements here, the MRS of butter for toast is either infinite or zero. Albert wants to consume exactly twice as much butter as toast. We obtain an interior, non-tangency, solution