ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The demand for a product can also be affected by changes in the prices of related goods such as substitutes or complements. A substitute is a good or service that can be used in place of another good or service.

Detailed explanation-2: -Two goods that are substitutes show a positive cross elasticity. It means that as the price of product x rises, the demand for the other product rises. As seen in the graph above, when the price of tea increases, the quantity demanded of coffee also increases.

Detailed explanation-3: -What Is Change in Demand? A change in demand describes a shift in consumer desire to purchase a particular good or service, irrespective of a variation in its price. The change could be triggered by a shift in income levels, consumer tastes, or a different price being charged for a related product.

Detailed explanation-4: -A decrease in the price of substitute goods leads to an decrease in the demand for given commodity and vice versa. Eg., if price of a substitute good (say coffee) decreases, then demand for given commodity (say tea) will fall, so demand for a given commodity is directly affected by change in price of substitute goods.

Detailed explanation-5: -The answer to this question is: b) It measures the change in the quantity consumed as the consumer substitutes away from the relatively more expensive good toward other relatively cheaper goods.