Question

In the following Question, read the statements and choose the correct alternative among those given below:

Statement 1: Substitute goods have competitive demand.

Statement 2: Change in the price of substitutes directly affects the demand for a given commodity.

Options

• Both the Statements are true.

• Both the Statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Both the Statements are true.

Explanation:

Substitute goods compete to satisfy the same want, so a change in the price of one substitute affects demand for the other.