A product that can be used in place of another is called which term?

A product that can be used in place of another is called which term?

• A. Substitute
• B. Complement
• C. Normal Goods
• D. Inferior Goods

Answer: (A)

Two goods that can replace each other to satisfy the same need are substitutes. A product that can be used in place of another is called a substitute because consumers can switch to it from the other good when it becomes relatively cheaper or more attractive. This substitutability means demand for one rises if the price of the other falls, a relationship described by a positive cross-price elasticity of demand. In contrast, a complement is something typically bought with another (used together). Normal goods are those whose demand increases with income, while inferior goods see demand fall as income rises.

Two goods that can replace each other to satisfy the same need are substitutes. A product that can be used in place of another is called a substitute because consumers can switch to it from the other good when it becomes relatively cheaper or more attractive. This substitutability means demand for one rises if the price of the other falls, a relationship described by a positive cross-price elasticity of demand. In contrast, a complement is something typically bought with another (used together). Normal goods are those whose demand increases with income, while inferior goods see demand fall as income rises.