Distinguish between Substitute goods and Complementary goods.

substitute goods are those goods whose demand of the giuven good and price of the other good are directly propotional.for example tea and coffe.. substitute goods are those goods which can be used instead of the other... if we go to a restaurent and find price of coffe more than that of tea, a general tendency of the consumer will be to switch over to tea from that of coffee... so here we see that when price of coffe increases demand for coffe decreases as a result demand for nits substitute good ie tea increase . thus price of the given good and demand of the other good is directly propotional in case of substitute goods.

now in case of complementry goods. these are those goods which are used together. the price of the given good and demand for the other good is inversly propotional in case of complementry goods. take exaple of milk and tea leaves. we can use tea leaves only if we buy milk (in general) thus they are used together. now when price of tea leaves increases then automatically we reduce the consumption(buying) of tea leaves which leads to reduce in demand of tealeaves. now since we have reduced the tea leaves we will automatically reduce milk. and that is why when price of tea leaves increases then demand for milk decreases, thus showing negative relationship (inversly propotional) between tealeaves and milk.

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substitute goods r those that can be used in place of each other,eg. tea and coffeecomplimentary goods are those that cannot be used in place of each other but are necessary for each others use,for eg. car and petrol

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