Two goods are substitutes when?

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1288974

2026-03-31 22:35

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Two goods are substitutes when an increase in the price of one good leads to an increase in the demand for the other good. This occurs because consumers may switch from the more expensive good to the cheaper alternative, seeking to maintain their utility. For example, if the price of coffee rises, consumers might buy more tea instead. Substitutes typically fulfill similar needs or desires for consumers.

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