If the price of commodity X rises and consumers shift to commodity Y, then commodities X and Y are

Assessment: JAMB UTME - Economics - 2024 Subject: Economics

Question 1 Report

If the price of commodity X rises and consumers shift to commodity Y, then commodities X and Y are
Answer Details

If the price of commodity X increases and consumers start purchasing commodity Y instead, then commodities X and Y are considered substitutes. Substitutes are goods that can be used in place of one another; when the price of one goes up, consumers naturally shift their demand to the other because it serves a similar function or purpose.
Consider an example: if the price of coffee goes up, people might start drinking tea instead if tea serves as a similar alternative for their morning beverage needs. In this scenario, coffee and tea are substitutes. Therefore, the relationship between these goods is defined by consumers' ability to consider one in place of the other based on price.
In summary, when consumers replace their consumption of one good with another due to price change, the goods in question are substitutes.

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