Substitute Good

Examples of Substitute Good in the following topics:

• Cross-Price Elasticity of Demand

  • The cross-price elasticity may be a positive or negative value, depending on whether the goods are complements or substitutes.
  • A positive cross-price elasticity value indicates that the two goods are substitutes.
  • For substitute goods, as the price of one good rises, the demand for the substitute good increases.
  • Conversely, the demand for a substitute good falls when the price of another good is decreased.
  • Two goods that are substitutes have a positive cross elasticity of demand: as the price of good Y rises, the demand for good X rises.

• Determinants of Price Elasticity of Demand

  • A good's price elasticity of demand is largely determined by the availability of substitute goods.
  • Availability of substitute goods: The more possible substitutes there are for a given good or service, the greater the elasticity.
  • When several close substitutes are available, consumers can easily switch from one good to another even if there is only a small change in price .
  • Conversely, if no substitutes are available, demand for a good is more likely to be inelastic.
  • The relative high cost of such goods will cause consumers to pay attention to the purchase and seek substitutes.

• Applications of Principles on Consumer Choices

  • The substitution effect is closely related to that of the income effect, where the price of goods and a consumers income will play a role in the decision-making process.
  • In the substitution effect, a lower purchasing power will generally result in a shift towards more affordable goods (substituting cheaper in place of more expensive goods) while a higher purchasing power often results in substituting more expensive goods for cheaper ones.
  • This translates to the graph above as the consumer makes choices to maximize utility when comparing the price of different goods to a given income level, substituting cheaper goods and more expensive goods dependent upon purchasing power.
  • This two-part graphical representation of the substitution effect identifies the relationship between the price of a given good and the quantity purchased by a given consumer.
  • Explain the labor-leisure tradeoff in terms of income and substitution effects

• Characteristics of Pure Competition

  • Sellers cannot charge a price above the market price because sellers see all other goods in the market as perfect substitutes.
  • They can buy those goods at the market price.

• Elasticity of Demand

  • The overriding factor in determining PED is the willingness and ability of consumers after a price change to postpone immediate consumption decisions concerning the good and to search for substitutes ("wait and look").
  • Availability of substitute goods: The more and closer the substitutes available, the higher the elasticity is likely to be, as people can easily switch from one good to another if an even minor price change is made.
  • In other words, there is a strong substitution effect.
  • If no close substitutes are available, the substitution of effect will be small and the demand inelastic.
  • Duration: For most goods, the longer a price change holds, the higher the elasticity is likely to be, as more and more consumers find they have the time and inclination to search for substitutes.

• Mapping Preferences with Indifference Curves

  • A consumer would be just as happy with any combination of Good X and Good Y on the curve .
  • Perfect Substitutes: To understand what a indifference curves will look like when products are perfect substitutes, please see .
  • Perfect substitutes are often homogeneous goods.
  • In this particular series of indifference curves it is clear that 'Good X' and 'Good Y' are perfect substitutes for one another.
  • Describe the indifference curves for goods that are perfect substitutes and complements

• Changes in Demand and Shifts in the Demand Curve

  • Movements along the demand curve are due to a change in the price of a good, holding constant other variables, such as the price of a substitute.
  • Shifts in the demand curve are related to non-price events that include income, preferences and the price of substitutes and complements.
  • An increase in income will cause an outward shift in demand (to the right) if the good or service assessed is a normal good or a good that is desirable and is therefore positively correlated with income.
  • Alternatively, an increase in income could result in an inward shift of demand (to the left) if the good or service assessed is an inferior good or a good that is not desirable but is acceptable when the consumer is constrained by income .
  • A change in preferences could result in an increase (outward shift) or decrease (inward shift) in the quantity level desired for a specific price; while a change in the price of a substitute, could result in an outward shift if the price of the substitute increases and an inward shift if the substitute's price decreases.

• Finding Jobs in Education

  • Networking, volunteering, and substitute teaching are all strategic ways to gain experience and secure the perfect job in education.
  • Another way to get your foot in the classroom door is to work as a substitute teacher.
  • A substitute teaching position can put you in a good position to hear about possible full-time job openings in your district while adding more to your resume.
  • Substitutes can also find work by contacting private schools in their district.
  • A substitute teaching position can put you in a good position to hear about possible full-time job openings in your district while adding more to your resume.

• Reactions of Aromatic Compounds

  • An example of an aromatic substitution reaction is shown below.
  • The replaced species is typically a good leaving group, like nitrogen gas or a halide ion.
  • A number of patterns have been observed regarding the reaction of substituted benzene rings.
  • Example of an aromatic substitution reaction.
  • As an exercise, draw out the stabilization of the positive charge when ortho substitution occurs.

• Nucleophilic Substitution of the Hydroxyl Group

  • In fact ethyl alcohol is often used as a solvent for alkyl halide substitution reactions such as this.
  • One such modification is to conduct the substitution reaction in strong acid so that –OH is converted to –OH2(+).
  • The strong acids HCl, HBr and HI are not subject to this difficulty because their conjugate bases are good nucleophiles and are even weaker bases than alcohols.
  • The following equations illustrate some substitution reactions of alcohols that may be effected by these acids.
  • The importance of sulfonate esters as intermediates in many substitution reactions cannot be overstated.