What are goods called that can be used in place of each other?

Goods that can be used in place of each other are referred to as substitutes. When two goods are substitutes, an increase in the price of one good can lead to an increase in the demand for the other, as consumers switch to the cheaper alternative. This relationship highlights the concept of substitution in economics, where preferences change based on price variations.

In economic terms, substitutes have similar functionalities, meaning that if the availability or price of one rises, consumers may opt for the other. This is an essential concept in analyzing consumer behavior and market dynamics, illustrating how different goods relate to one another in terms of demand. Understanding substitutes helps in predicting market reactions to pricing changes and can guide businesses in competitive strategy.