Question

Difference between perfect substitutes and close substitutes

Answer 1

heyy mate!!

If good A is perfect substitute for good B,then people will be 'indifferent' between them.The price of both A and B will be the same,because if one is priced any higher than the other.then none at all of the higher priced item will be purchased.

By similar reasoning,if both products exist in the same market,but have different prices, we can correctly assume they are not perfect substitutes.Some characteristics of one or the other is allowing people to be willing to pay more for it.

Hope it helps you...mate!!