Microeconomics- Perf complements and sub effect

Sun 29 Oct, 2017 02:14 pm
Delia Jones is in the habit of drinking glasses of wine while
watching TV cookery programs that are provided on a “pay
per view” basis. She drinks 2 glasses of wine during each
cookery program, will not watch cookery programs if she
does not have two glasses of wine available, and only drinks
wine while watching cookery on TV.
On a graph, draw 3 of Delia’s indifference curves for the
choice over glasses of wine, and cookery programs. Draw
the indifference curves that go through the points (2
glasses of wine,1 program), (6 glasses, 3 programs) and
(10 glasses, 5 programs). Put the number of glasses on the
horizontal axis, and the number of programs on the vertical

If the price of wine falls (due to a bumper harvest in France,
What will be the change in Delia’s demand for wine due to
the substitution effect?

I think the answer is that there's no change in demand because glasses of wine and tv programs have to be consumed together
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cicerone imposter
Sun 29 Oct, 2017 02:22 pm
You answered your own question. However, the amount of wine drinking is based on the individual's habits based on where and when. In my wine drinking days, when I didn't have any medical restrictions, I usually had one or two glasses of wine with dinner. I'm now restricted to one glass of wine per week. The funny thing is, I don't drink one glass every week. It's usually once or twice a month. When we go on our one week river cruise next month, I'll probably have glass on the first day, and one glass on the last day. Always red wine; it's good for our health. Wink

Sun 29 Oct, 2017 02:30 pm
@cicerone imposter,
I was looking for a more technical answer but thanks for trying. So what about the substitution effect?
cicerone imposter
Sun 29 Oct, 2017 02:43 pm
Sun 29 Oct, 2017 02:45 pm
@cicerone imposter,
I just don't get this particular case, I know the basics.
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Mon 30 Oct, 2017 07:52 am
The function is obviously a perfect complements function.

W= wine
C = Cookery programs
I = Income
Pw = Price of wine
Pc = Price of cookery programs

To find the optimal choice you need to impose:
2W = C

Now, let's substitute intmato the budget line:
Pw*W+Pc*2W = I
W (Pw+2Pc) = I
W = I/ (Pw+2Pc)

This shows that the demand of W is inversely proportional to Pw, moreover watching cookery programs usually costs nothing.

If it costs nothing, the demand of wine is: W = I / Pw, which should suggest that the demand increases as Pw diminishes.

PS: Check the mathematical steps, I'm not too good at it and I could have made errors...
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