3 Questions
Which of the following best describes substitute goods?
Goods or services that can be used instead of other goods or services, causing a change in demand.
What effect do substitute goods have on demand?
Decrease demand
Which of the following is NOT a characteristic of substitute goods?
They are always more expensive than other goods or services.
Study Notes
Substitute Goods
- Substitute goods are products that can be used in place of each other to satisfy a particular need or want
- Examples of substitute goods include Coca-Cola and Pepsi, or Apple iPhone and Samsung smartphone
Effect on Demand
- An increase in the price of one substitute good leads to an increase in demand for the other substitute good
- This is because consumers will switch to the cheaper substitute good when the price of their preferred good increases
Characteristics of Substitute Goods
- Not a characteristic of substitute goods: perfect substitutes, as substitute goods are not identical but can be used as alternatives
Test your knowledge on the price of substitute goods and how they impact demand with this interactive quiz. Explore the concept of goods or services that can be used as alternatives to others, causing shifts in consumer preferences and pricing dynamics. Challenge yourself with questions that delve into the intricacies of substitute goods and their effects on market behavior.
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