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Introduction of Micro-Economics — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsIntroduction of Micro-Economics2 Marks
Question
Distinguish between substitute goods and complementary goods, with examples.
✓

Answer

The difference between substitute goods and complementary goods is given as follows:

Basis

Substitute Goods

Complementary Goods

Definition

Substitute goods refer to those goods that can be consumed in place of each other.

Complementary goods refer to those goods that are consumed together.

Relationshipwith Price

In case of substitutegoods, if the price of one good increases, the consumer shifts his demand to the other (substitute) good i.e. rise in the price of one good results in a rise in the demand of the other good and vice-versa.

In case of complementary goods,if the price of one good increases then a consumer reduces his demand for the complementary good as well, i.e. a rise in the price of one good results in a fall in demand of the other good and vice-versa.

Examples

Tea and coffee, colgate and pepsodent, cello pens and reynolds pen.

Tea and sugar, ink pen and ink, printer and paper.

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