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11 Common Examples of Substitute Goods

Substitute goods are those which can be used in place of one another. As consumers we use and substitute various goods and services in our day-to-day life. Some common examples are given below:

1. Diesel car and Petrol Car or

Diesel/Petrol car and Electric vehicle (EV)

Diesel and petrol are the two common fuels used to run car engines. Before buying a car, a customer has to decide whether to buy a diesel vehicle or petrol vehicle. The change in the price of one fuel has an effect on the purchase of the other fuel. When the price of petrol goes up, diesel becomes relatively cheaper. Hence, the demand for diesel-run cars will increase. In the current scenario, Electric vehicles (EVs) are turning out to be a viable substitute for petrol and diesel vehicles as they are environmentally friendly and have less fuel costs.

2. OTT and Cable

 OTT and movie theater

Another example of substitute good is the OTT (over the top) platform such Netflix, Amazon Prime etc and Cable T.V. The OTT platform channels compete with the cable T.V and keep adjusting their subscription rates with an aim to attract more subscribers. Consumers also make a choice whether to watch a movie on OTT or the theatre. Higher ticket prices may force the consumers to watch a movie on OTT rather than in the theatre.

3. Hardcopy and Digital Copy

You can buy the hardcopy of your favorite book or you can buy the digital copy. Generally hard-core fans prefer to buy the hardcopy of their favorite author, whereas other readers may substitute hardcopy with the digital copy if the hardcopy prices are high.

4. Debit cards/ Credit card and cash money

 A customers can pay through different methods for the goods and services bought. He/she can pay through cash or through debit or credit cards. Sometimes paying by cash a is charged a fee in some countries. If this fee is high, customers may choose other options. Similarly, a high interest on credit card makes the payments through them costly and people can substitute debit cards with credit cards.

5. Almonds and Cashews

If the price of cashew rises, people can substitute almonds for cashews as almonds become relatively cheaper.

6. Thermal power and Solar Power

Electricity can be produced through coal or solar power. High thermal pricing can force consumers to switch to solar energy. In countries where sunlight is scarce, solar energy is expensive and other means of electricity generation are used.

7. Hotels and Homestay Villas

Tourists have an option of staying at hotels or homestay villas. It depends upon the pricing of the two options. Higher hotel prices can make the customers switch to homestay villas.

8. Train and Plane

Bus and Train

The modes of transportation can be substituted with each other. However, these are not perfect substitutes as an inter-country travel is possible through airplanes. However, for shorter distances, these are a good substitute.

9. Wheat and Rice

These are staple food items in many countries. Rising prices of one food-grain will lead to substitution with the relatively cheaper one.

10. Gold and Diamond

The precious elements can be seen as substitutes by consumers. However, people who prefer diamonds over gold would not substitute diamond with gold even with a rise in price of diamonds.

11. Gas Stove and Electric Stove

Rising gas prices can force consumers to switch to electric stoves.

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