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en:substitute-goods [2018/09/29 11:39]
federico created
en:substitute-goods [2018/09/29 11:46] (current)
federico
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-What are Substitute Goods+====== Substitute Goods ====== 
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 +===== What are Substitute Goods? ===== 
  
 Substitute Goods are those goods that can be used to satisfy the same necessity. Substitute goods have positive cross elasticity of demand. Substitute Goods are those goods that can be used to satisfy the same necessity. Substitute goods have positive cross elasticity of demand.
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 {{:​en:​subsitute-goods-example.png?​nolink|}} {{:​en:​subsitute-goods-example.png?​nolink|}}
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 +For example, butter and margarine can be used to satisfy the same need. Although, some people will prefer one over the other. In this case, butter and margarine are **close** but not perfect substitutes.
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 +**Perfect substitutes** have a cross elasticity that trends to positive infinity. If the price of one increase more than the price of the other, consumers will buy only the cheaper. ​
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 +Examples of perfect substitute goods are two one-dollar bills or different soybeans of the same quality. ​
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en/substitute-goods.txt · Last modified: 2018/09/29 11:46 by federico