ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An increase in the price of a good will increase demand for its substitute, while a decrease in the price of a good will decrease demand for its substitute.

Detailed explanation-2: -The demand for a good increases, if the price of one of its substitutes rises. The demand for a good decreases, if the price of one of its substitutes falls. A good that is consumed with another good. For example, ice cream and fudge sauce.

Detailed explanation-3: -Demand is generally considered to slope downward: at higher prices, consumers buy less. The point at which the two curves intersect represents the market-clearing price-the price at which demand and supply are the same. Prices can change for many reasons (technology, consumer preference, weather conditions).

Detailed explanation-4: -With increase in the price of the substitute of Good-X, demand curve of Good-X will shift to the right. Accordingly equilibrium price and quantity of Good-X would tend to increase.

Detailed explanation-5: -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.