What is the definition of perfect substitutes?
Understand the Problem
The question is asking for a definition of 'perfect substitutes', which is a concept in economics referring to goods that can replace each other with no loss of utility. This means that a consumer is indifferent between the two products as they have the same utility or value to them.
Answer
Goods or services that are identical in function.
The final answer is goods or services that are identical in function, making consumers indifferent to which one they choose.
Answer for screen readers
The final answer is goods or services that are identical in function, making consumers indifferent to which one they choose.
More Information
Perfect substitutes must have indistinguishable utility and can be used interchangeably without any loss of value or function. Classic examples include brands like Coke and Pepsi.
Tips
Common mistakes include assuming that perfect substitutes exist only if they are produced by the same company or that differences in price or quality invalidate their status as perfect substitutes.
Sources
- Perfect substitute - Oxford Reference - oxfordreference.com
- Definition of Perfect Substitute | Higher Rock Education - higherrockeducation.org
- Substitute goods - EconomicPoint - economicpoint.com
