Substitute

View FREE Lessons!

Definition of a Substitute:

A Substitute is a good or service that have the same function, but are not the same product.

Detailed Explanation:

If the price of oranges increases, the quantity demanded of oranges would drop, so fruit loving consumers would purchase peaches instead of oranges. Peaches and oranges are substitutes. When the price of a good increases, the demand for all of its substitutes will also increase. Conversely, if the price of a good decreases, the demand for its substitutes will decrease. Competing companies in the same industry often sell substitute goods. For example, Coca-Cola and PepsiCo offer substitute soft drinks. If one company increases its price, the demand for the other company's soft drinks will increase. 

Search the Glossary


Market Overview:

Market quotes are powered by TradingView.com

Single Quote:

© 2018 Higher Rock Education and Learning, Inc. All rights reserved. No portion of this site may be copied or distributed by any means, including electronic distribution without the express written consent of Higher Rock Education and Learning, Inc.