Suppose that there are only two types of shoes in the world. Regly tennis shoes, that sell for $30 a pair, and Super Air Swooshes, that sell for $55 a pair. You do not have to give me any numbers, just think about how you might choose to spend your money. Now, suppose Regly tennis shoes increase in price to $50 a pair, what would happen to your demand for Super Air Swooshes? Given your answer, what are the substitution and income effects?

Suppose that there are only two types of shoes in the world. Regly tennis shoes, that sell for $30 a pair, and Super Air Swooshes, that sell for $55 a pair. You do not have to give me any numbers, just think about how you might choose to spend your money. Now, suppose Regly tennis shoes increase in price to $50 a pair, what would happen to your demand for Super Air Swooshes? Given your answer, what are the substitution and income effects?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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