Classify the following pairs of goods and services as...

Classify the following pairs of goods and services as substitutes in production, complements in production, or neither. a. Bottled water and health club memberships b. French fries and baked potatoes c. Leather purses and leather shoes d. Hybrids and SUVs e. Diet coke and regular coke

Transcript

00:01 So here we're thinking about a peer related goods in terms of production, right? do things go together or can they replace each other, right? so a bottled water plus health club membership.

00:23 So do these things go together to produce something? do they replace each other? do they have no real effect, right? i would say these are probably weak compliments because they go together in they jointly produce fitness, right? let's say that you go to your health club.

00:51 You might consume bottled water at your health club when you are exercising, right? health clubs are something that i use as part of exercise.

00:59 Bottled water is something that i use as part of exercise.

01:03 So these things are both sort of working together to produce fitness, right? the more i go to my health club, the more bottled drinks i consume, right? i go to the health club to exercise.

01:12 While i'm exercising at the health club, i need a bottle of drink.

01:15 So i would think these things are sort of very weak compliments, right? b, french fries and baked potatoes.

01:28 These are clearly substitutes, right? you can substitute, you can replace one with another, right? imagine that you're out for a steak dinner.

01:43 And, you know, you can have nice french fries with your steak, or you can have a baked potato with your steak, right? they serve the same role in the meal of giving you carbs that you can put salt on, right? right.

01:58 You know, if someone said on the menu, you can substitute your fries for baked potato, you wouldn't feel like that's a really weird menu substitution.

02:05 Both these things can be substitutes in producing meals, right? you can replace one with the other, right? see, leather, purses, and shoes.

02:23 I'm going to say these are probably weak compliments.

02:27 They go together in style, right? they join.

02:32 Jointly produce style.

02:38 If you like leather, you know, you might want to match your leather purse with your leather boots, right? there is some sense that these things go together to make a coordinated outfit...

Question

Classify the following pairs of goods and services as substitutes in production, complements in production, or neither. a. Bottled water and health club memberships b. French fries and baked potatoes c. Leather purses and leather shoes d. Hybrids and SUVs e. Diet coke and regular coke

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