WAEC Economics 2018 Paper

Concept:Substitute goods are products that can be used for the same purpose by the same consumers.When one becomes costly, consumers switch to the other alternative.Explanation:Commodity $X$ and commodity $Y$ are used to satisfy a similar want.When the price of commodity $X$ rises, consumers find it more expensive than before.As a result, they reduce their demand for $X$.They shift to commodity $Y$, which can replace $X$ for the same purpose.This behaviour shows that $X$ and $Y$ serve the same need of the consumer.Goods that can replace one another in this way are called substitutes.For example, tea and coffee are substitutes because a rise in the price of tea increases the demand for coffee.Complementary goods are used together, like a car and fuel, so a rise in the price of one reduces the demand for the other as well.Here, the increase in the price of $X$ raises the demand for $Y$, confirming that $X$ and $Y$ are substitute goods.Answer:A. substitutes