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, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 11PA

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