Substitutes are goods where you can consume one in place of the other. The prices of complementary or substitute goods also shift the demand curve. ... When the price of a substitute good decreases, the quantity demanded for that good increases, but the demand for the good that it is being substituted for decreases.

What happens to demand when substitute price increases?

An increase in the price of one substitute good causes an increase in demand for the other. A decrease in the price of one substitute good causes a decrease in demand for the other. ... The result is an increase in the demand for OmniCola and a rightward shift of the demand curve.

How do substitutes affect demand elasticity?

Availability of Substitutes

In general, the more good substitutes there are, the more elastic the demand will be. ... This means that coffee is an elastic good because a small increase in price will cause a large decrease in demand as consumers start buying more tea instead of coffee.