what is the difference between substitute goods and complementary goods ?¿
Answers
Substitute goods are the goods which can be used in place of each other to satisfy a want. Complementary goods are the goods which are to be used together to satisfy a want. 3. When the price of one good increases, then the demand for its substitute will increase.
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Coke and Pepsi, iPhone and Galaxy S series, Nike and Adidas are a few examples of substitute goods. If price of Coke increases, demand for Pepsi should increase because many Coke consumers will switch over to Pepsi. Similarly, prices of iPhone and Galaxy S affect their mutual demand. Given that there are many fanboys who will reprioritize their spending to afford an iPhone even after the price increase, many rational consumers will weight their preference for one product over the other and the premium they are willing to pay.
ᥴꪮꪑρʟꫀꪑꫀꪀᴛꪖʀꪗ ᧁꪮꪮᦔs
iPhones and iPhone skins, air travel and hotels, etc. are examples of complementary goods i.e. goods that are used/consumed together. If iPhone becomes expensive and its quantity demanded decreases, you would expend the demand for iPhone covers to drop too and vice versa. It follows that demand for a product is to some extent dependent on the price of its complementary goods.
Other examples of complementary goods include cars and gasoline, Big Mac and McFries, coffee and cheesecake, etc