Consumers' ability to substitute among different goods explains

Expert Solution

Each consumer has ability to substitute among different goods. Like if goods are substitute goods like tea and coffee. Then consumer can choose either among tea or coffee depending upon from consumption of which good he gets maximum satisfactions and the relative price of goods. If the relative price of tea is less than coffee. then consumer can consume more tea and less coffee.

Complimentary good:- Goods like scooter and petrol both are needed at a time. One consumer cannot only consume scooter without petrol, both are needed at a time.

Some goods are inferior goods,normal goods and Necessity good.

Consumption of cheap cars decrease with income so cheap cars are inferior goods. Normal goods consumption increases with income. Like consumption of protein diet like milk and fish increases with income. Necessity good consumption is not effected by income. Like person salt consumption does not increase or decrease with income.

Rahul Sunny answered 2 years ago

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What are substitute and complementary goods? Explain with examples.

This question comes from the chapter of consumer behaviour in economics.

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