Substitute Goods. The substitute good can be defined as the goods which can be used interchangeably to satisfy the same requirement of consumers. That is a consumer perceives both goods as similar or comparable so that having more of one good causes the consumer to desire less of the other good.
These goods have positive cross elasticity of demand which means the sale of one good rise when there is a rise in the price of another good and vice versa. A substitute good is defined as a product or service that is used in place of another. The other products the substitutes have a positive cross elasticity of demand.
If the price of one of the products rises or falls then demand for the substitute goods or substitute good if there is just one other is likely to increase or decline.
A substitute or substitutable good in economics and consumer theory refers to a product or service that consumers see as essentially the same or similar enough to another product. These goods have positive cross elasticity of demand which means the sale of one good rise when there is a rise in the price of another good and vice versa. The other products the substitutes have a positive cross elasticity of demand. Substitutes present the consumer with alternative choices.
