Question

substitute products A and B are produced at different firms.Give a reason why a change in the price of product A will bring about a change in yhe quantity demanded for product B?

Answer 1

ANSWER:-

Substitute goods are those goods which can be used in place for one another and satisfy the same type of demand.

When two commodities are close substitutes an increase in price of one may shift and increase the demand for the other commodity. This is beacuse subsititute goods are competitive in nature.

Suppose if price of commodity A falls/decreases, this would decrease the demand for commodity B and increase the demand for commodity A as the demand for a commodity is also influenced by the change in price of its related good.

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