Draw figures that show your indifference curves for the following pairs of goods. For each pair, are the goods perfect substitutes, perfect complements, substitutes, complements, or unrelated goods? a. Right gloves and left gloves b. Coca-Cola and Pepsi c. Desktop computers and laptop computers

2. Julian buys plants and flowers every month. Both are normal goods. When the price of flowers fell, Julian purchased fewer plants. Explain what the income effect and substitution effect predict when the price of flowers falls. Which effect was stronger for Julian?

The graph shows Esther's best affordable point at A. The price of seeing a movie falls and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B3. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. What is Esther's substitution effect and income effect? For Esther, the substitution effect is the movement from movement from A. point C to point B; point B to point A B. point A to point B; point B to point C C. point A to point C; point C to point B D. point B to point C; point C to point A and the income effect is the C 8- 6- 4- 2- 0- Magazines (per month) 0 A 2 B₁ с 12 4 6 Movies (per month) >>> Draw only the objects specified in the question. B₂ 8

Consider the increase in the price of a can of soda and assume that soda is a normal good. Describe how the income and substitution effects impact on the demand for the cola if its price increases. Also describe how these two effects interact for inferior goods if there is a fall in the price of the good. Use bullet points