1. Which of the following pairs of goods are likely to be classified as substitutes? Complements? Defend your answer.
1. Peanut butter and jelly
2. Eggs and ham
3. Nike brand and Reebok brand sneakers
4. IBM and Apple Macintosh brand computers
5. Dress shirts and ties
6. Airline tickets and hotels
7. Gasoline and tires
8. Beer and wine
9. Faxes and first-class mail
10. Cereal and milk
11. Cereal and eggs
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2. A study found that lower airfares led some people to substitute flying for driving to their vacation destinations. This reduced the demand for car travel and led to reduced traffic fatalities, since air travel is safer per passenger mile than car travel. Using the logic suggested by that study, suggest how each of the following events would affect the number of highway fatalities in any one year.
1. An increase in the price of gasoline
2. A large reduction in rental rates for passenger vans
3. An increase in airfares