A change in the relative prices of which of the following pair of goods would likely cause the smallest substitution effect ?
Correct answer: A. right shoes and left shoes
- A. right shoes and left shoes
- B. petrol from BP and petrol from shell
- C. kit-Kat chocolate snacks and Twix chocolate snacks
- D. coke and Pepsi
Explanation
Right and left shoes are strong complements because one has little use without the other. A relative-price change therefore produces little substitution toward one shoe and away from the other.
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