Compare the following pairs of goods: • Coca-Cola and Pepsi • Skis and ski bindings. to. In which case are the two goods complementary? In what case are they substitutes? b. In which case do you expect indifference curves to be straight? In which case do you expect inference curves to have 90 degree angles?
4. Compare the following pairs of goods:
• Coca-Cola and Pepsi
• Skis and ski bindings.
to. In which case are the two goods complementary? In what case are they substitutes? b. In which case do you expect indifference
In economics, two goods can be broadly categorized as complements or substitutes based on consumer consumption patterns.
Complementary goods are typically consumed together, and an increase in the consumption of one leads to an increase in the consumption of the other.
Substitute goods, on the other hand, can replace each other in consumption.
A preference or rise in the consumption of one will likely lead to a decrease in the consumption of the other.
Indifference curves depict the combinations of two goods that provide the consumer with the same level of satisfaction.
The shape of these curves can indicate whether goods are substitutes or complements.
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