Overview
Substitutes and complements are fundamental concepts in economics that describe how different goods relate to each other in terms of consumer choice. Substitutes are goods that can replace one another, meaning that if the price of one rises, consumers may switch to the other. Complements, on the oth...
Key Terms
Example: Butter and margarine.
Example: Peanut butter and jelly.
Example: A downward sloping line on a graph.
Example: If the price of coffee rises, demand may drop significantly.
Example: The price at which the quantity of goods supplied equals the quantity demanded.
Example: Choosing between two brands of cereal.
Related Topics
Market Structures
Study of different market forms and their characteristics.
intermediateConsumer Theory
Understanding how consumers make choices based on preferences and budget constraints.
intermediatePrice Discrimination
Analyzing how different prices are charged to different consumers for the same good.
advancedKey Concepts
SubstitutesComplementsDemand CurveConsumer Choice