ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The demand for pens will increase as the price of pencils rises, . Pens and pencils are substitute goods, goods that can be used in place of each other. Hence, as pencils become more expensive, people will substitute pencils for pens. This will increase the demand for pens.

Detailed explanation-2: -They can be used interchangeably. Consumers may either decide to write using pen or using a pencil. Therefore, pens and pencils are perfect substitutes. This is because they are both used exactly for the same purpose, which is writing.

Detailed explanation-3: -Option A is incorrect because pen and paper are not considered substitutes. In case, the price of pen rises, the demand for paper is unaffected because replacing pen with paper is not of any use. Rather these goods are treated as complementary goods which are consumed together.

Detailed explanation-4: -For example, a one-dollar bill is a perfect substitute for another dollar bill. And butter from two different producers are also considered perfect substitutes; the producer may be different, but their purpose and usage are the same.

Detailed explanation-5: -Butter and margarine. Physical books and e-books. Sandals and flip-flops. Tuna and salmon. Steel-toe boots and composite-toe boots. Minivans and sport utility vehicles. Earrings and necklaces. Eyeglasses and contact lenses. More items •03-Feb-2023