1.

Write the differences between substitutes and complements.

Answer»
Substitute GoodsComplementa
• These are alternative goods available to satisfy our wants.• These are the goods which are consumed together.
• If the price of a product increases, the demand for its substitute also increases.• If the price of a product increases, the demand for its complementary good decreases.
• Examples for substitute goods are tea and. coffee, Colgate and Pepsodant, etc.• Examples for complementary goods are pen and ink, shoes and socks, etc.
• Here the demand curve shifts to the right in case of price rise.• Here the demand curve shifts to left in case of price rise.
• Price and demand move in same direction.• Price and demand move in opposite directions.



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