A local grocery store notices that the price of potatoes has significantly increased due to a supply shortage. As a result, they observe an increase in the sales of corn and a decrease in the sales of peanut butter. How can the concepts of substitutes and complements explain this situation?

In economics, substitutes are products that can replace each other, while complements are products that are often used together. When the price of potatoes rises, some customers may look for a cheaper alternative, like corn, which is a substitute for potatoes. This explains why the grocery store sees an increase in corn sales; people are trying to save money by buying corn instead of more expensive potatoes. On the other hand, if peanut butter is often eaten with potatoes, and potatoes become more expensive, people might buy less peanut butter because they are buying fewer potatoes. This decrease in peanut butter sales shows how the relationship between complements can also affect buying habits when prices change.