Substitutes can be defined as goods that can be used in place of one another. When demand for product A causes a decline for product B, this is called substitutes (Colander, 2013). An individual can buy either one of them. Substitutes are ever-present in the market and are the stable of the free markets’ completion. Complements are goods that are used in conjunction with other goods (Colander, 2013). An example would be if an individual buys a printer, and they are aware that at some point in the future they will have to replace the ink cartridge. Additionally, they only buy the ink ...view middle of the document...
However, there are plenty of substitutes out there that people may purchase which are very similar. If a consumer was looking to purchase an iPad, they might substitute that purchase with a competing product such as a Samsung tablet. Substitutes and complements both affect supply and demand in terms of microeconomics (Creative Business: Substitutes and Complements, 2014).
The reason some products become substitute goods is because the value is the single most important factor that influences consumers into choosing substitute goods over favored goods. Substitutions are so similar to the original good that most consumers do not realize the difference and have the added benefit of savings for the consumer. Substitutions are used if the original good is unavailable or if the price difference is significant. When income is low, consumers tend to spend more wisely; therefore consumers choose the less expensive option, substitutes. When the price of a good increases the demand for substitute’s increase and vise versa, so if the price of goods decrease the demand for substitutes decrease. Complements by contrast are simply categorized as a good which pairs well with the other and has substitutes of its own. Given the free market of today’s society almost every good has a substitute for which there may be slight differences, but in the end price always wins.