State The Difference Between Complementary And Substitute Goods?


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The difference between substitute and complimentary is-

-> A substitute is something used instead of a particular good or service, eg. For dinner , if you decide to eat beef instead of eating chicken because they both have protein, this is a substitute. If the price of chicken then increases, more people would be willing to buy beef since it is cheaper..

-> Complimentary items are used in conjunction to each other, in other word, you need to buy both for something to typically work. Eg. Peanut butter and jelly are used in conjunction to each other and there fore are complimentary items. So if the price of peanut butter then increases, more people will decrease in buying both peanut butter and jelly because they are typically purchased together.

-> so therefore, the difference is that substitute is an item replacing a good or item when there is a price change and complimentary is two items that are bought together , both decreasing in demand because one item is being sold at a higher price and people need both two continue with their plans!

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