Which term describes a good that can replace another good in consumption, satisfying the same basic want?

Which term describes a good that can replace another good in consumption, satisfying the same basic want?

• A. Complementary Good
• B. Demand
• C. Substitute Good
• D. Supply

Answer: (C)

Subsistence in consumption happens when two goods can satisfy the same basic want, so they can stand in for each other. If the price of one good rises, people tend to switch to its substitute, increasing demand for the other. That switching behavior is the telltale sign of a substitute good: it can replace another in consumption and still satisfy the same need. Complementary goods, in contrast, are goods that are used together, so they’re not replacements. Demand concepts describe how much people want at various prices, not a type of good. Supply describes how much producers are willing to offer at different prices, not a replacement relationship in consumption.

Subsistence in consumption happens when two goods can satisfy the same basic want, so they can stand in for each other. If the price of one good rises, people tend to switch to its substitute, increasing demand for the other. That switching behavior is the telltale sign of a substitute good: it can replace another in consumption and still satisfy the same need.

Complementary goods, in contrast, are goods that are used together, so they’re not replacements. Demand concepts describe how much people want at various prices, not a type of good. Supply describes how much producers are willing to offer at different prices, not a replacement relationship in consumption.