# Substitute good

As substitutes (including substitutes ) is called in the microeconomics goods that the same or similar needs of breastfeeding and therefore the consumer are considered equivalent Ersatzgut. The reason for such an exchange relationship is the functional interchangeability between two goods. It is given when the goods are so similar in price, quality and performance that they are suitable to meet the same needs of the customer. Typical examples of substitute goods are butter and margarine or pretzels and pretzel sticks.

The opposite of substitute goods are complementary goods, i.e. goods that complement each other, such as skis and lift tickets. The strictest form of this complementarity is the so-called limitation , in which the demand for two goods is proportional , for example wallpaper and paste.

## Demand behavior for substitute goods

The demand for two exchangeable goods is linked to one another: as the price of a good rises , its demand falls - assuming that all other factors in the market remain the same ( ceteris paribus ). At the same time, the demand for the substitute product, which is unchanged in price, is increasing (here too, ceteris paribus). This results in a right shift in the demand curve, since the price does not change, but the quantity increases. There is thus a positive relationship between the price of a good and the demand for its substitute. In this context, one speaks of a positive cross price elasticity .

## Examples

If the price of tea stays the same, but coffee becomes cheaper, there will be increased sales of coffee and less of tea. Further examples are:

## Degrees of substitutes

A typical concept for measuring the interchangeability between two goods is the marginal rate of goods substitution . It describes the exchange ratio desired by the consumer between two goods. Mathematically, it is measured as the slope of the indifference curves between two goods.

### Perfect (perfect) substitutes

Linear indifference curves - perfect substitute

If two goods can be completely replaced by one another without additional costs , quality differences or similar incentives occurring, which could lead the consumer to prefer a product, one speaks of a perfect or perfect substitute good.

Two goods are perfect substitutes if they have a constant marginal rate of substitution, i.e. their indifference curves are linear. The only thing that matters to the consumer is the total number of goods: e.g. (good 1, good 2) → (20.0) ~ (17.3). One can see that the consumer is indifferent between the two bundles of goods, since the sum of goods 1 and 2 is the same in both cases.

### Imperfect (imperfect) substitutes

In this case, imperfect means that there may be differences in the areas of quality, expected costs, etc. If, for example, artificial leather is compared with leather , artificial leather is significantly cheaper, but generally cannot achieve the durability, suppleness, appearance, etc. of real leather. Nevertheless, both materials can be used very similarly.

## Substitutional production functions

If the production factors in the production process can be replaced or substituted for one another, it is a question of substitutional production functions .

### Alternative substitution

If the production factors are completely substitutable for one another, i.e. if the use of a production factor could be completely dispensed with, then it is an alternative substitution .

### Limited (peripheral) substitution

If, on the other hand, the combination process requires the use of a minimum amount of each production factor , then there is a limited substitution .