Substitute goods are goods that partly satisfy same needs of a consumer and can be used to replace one another(Browning, 1999). If the price of one good goes up, the sales of the other rise and vice versa. Purchasing margarine instead of butter because it costs less is an example of substitute good. Complementary goods are those whose use are interrelated with the use of an associated or paired good, this means that a demand for one generates demand for the other.
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Petrol and car is an example of these complementary products.On the other hand, unrelated goods are not related to one another and changes in the price of one good will have no effect on the demand for an independent good(Browning, 1999). Example is butter and golf ball. Peanut and butter are substitute as either can be used to replace the other but when jelly is added to the equation, it results to unrelated products, this is because jelly has no direct links with peanut and butter. Private and public transportation are substitute to each other, an individual can choose to either use private or public means of transportation.
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Coke and Pepsi are also substitute as both satisfy same needs of a consumer. Alarm clocks and automobiles are unrelated goods, these two are not related to each other and changes in the price of one will not have any effect on the price of the other. Lastly, golf clubs and golf balls are complementary products, their use is interrelated meaning that a demand in golf clubs will result in a demand of the golf balls.
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