We say that goods are substitutes when they:
A) serve similar-enough purposes that a consumer might purchase one in place of the other.
B) are consumed together, so that purchasing one will make a consumer more likely to purchase the other.
C) can replace something consumers typically purchase at a significantly lower price.
D) change a consumer's preferences for a good or service.

Question

Quizplus · Accepted Answer

Substitutes are goods that satisfy similar needs or wants, so that if the price of one increases, the demand for the other increases as well. For example, coffee and tea are substitutes because they both provide caffeine and are consumed for similar reasons. If the price of coffee were to increase, some consumers may switch to tea instead.

We Say That Goods Are Substitutes When They