Question

Distinguish between complementary goods and substitute goods

Answer 1

Answer:

Complementary goods: meaning of complementary is ‘useful or attractive together’. These are the goods which used together. Increase/ decrease in demand for one good will increase/decrease demand for other good also.

Ex: car and petrol, mobiles and mobile covers etc

Substitute goods: substitute goods have inverse relationship to each other i.e Increase in price of one good will decrease the consumption of that particular good and demand for another good increases.

Ex: increase in price of coffee makes people to have tea instead of coffee.

Answer 2

Answer:

Substitute goods are independent to each other while as complementary goods are inter-dependent. 2. If the price of one good increases, the demand of its substitute good increases while on the other hand if the price of good increases, the demand its complementary good decreases.

Explanation:

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