Difference between Substitute Goods and Complementary Goods

Basis

Substitute Goods

Complementary Goods

Meaning The goods which can be used in place of one another to satisfy a specific want. The goods which are used together to satisfy a specific want.
Nature of Demand Substitute goods have competitive demand. Complementary goods have joint demand.
Slope The demand curve for substitute goods is upward sloping. The demand curve for complementary goods is downward sloping.
Relation The price of one substitute good has a positive relationship with the quantity demanded of another substitute good. The price of one complementary good has a negative relationship with the quantity demanded of another complementary good.
Example Pepsi and Coca-Cola, Tea and Coffee, etc. Bread and Butter, Tea and Sugar, etc.

Difference between Substitute Goods and Complementary Goods

Substitute Goods and Complementary Goods are two types of goods with different effects of price change on the demand of the commodity.

Table of Content

  • What are Substitute Goods?
  • What are Complementary Goods?
  • Difference between Substitute Goods and Complementary Goods

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What are Substitute Goods?

The goods which can be used in place of one another to satisfy a specific want, like tea and coffee are known as Substitute Goods. The price of substitute goods directly affects the demand for a given commodity. For example, if the price of a substitute good (say, coffee) increases, then demand for the given commodity (say, tea) will increase as compared to coffee....

What are Complementary Goods?

The goods which are used together to satisfy a specific want, like bread and butter are known as Complementary Goods. The price of a complementary good and demand for the given commodity inversely relates to each other. For example, if the price of a complementary good (say, butter) increases, then demand for the given commodity (say, bread) will decrease as it will become costlier for the consumer to use both goods together....

Difference between Substitute Goods and Complementary Goods

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