ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

Detailed explanation-2: -Substitutes are goods that satisfy a similar need or desire. a. 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-3: -Increased prices typically result in lower demand, and demand increases generally lead to increased supply. However, the supply of different products responds to demand differently, with some products’ demand being less sensitive to prices than others.

Detailed explanation-4: -The substitute goods in economics are those categories of goods that can be used in place of each other. Thus, as the price of a substitute good rises then it causes the demand for the original good to rise wherein both the equilibrium price and quantity will rise.

Detailed explanation-5: -As we can see on the demand graph, there is an inverse relationship between price and quantity demanded. Economists call this the Law of Demand. If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases.