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?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 17P: If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded...

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