What are substitutes in economics?

Substitutes in economics refer to goods that can replace each other in consumption. When the price of one substitute increases, consumers tend to shift their demand to the other substitute. This relationship creates a direct correlation between the prices of the two goods and their demand. For example, if the price of coffee rises, consumers might buy more tea instead, illustrating how a rise in the price of one leads to an increase in demand for another.

In contrast, the other options either describe different economic concepts or do not accurately represent the nature of substitutes. Goods consumed simultaneously, for example, refer to complements rather than substitutes because they enhance satisfaction when used together. Classifying goods based on their utility describes a form of categorization that does not specifically address the relationship between substitutes. Finally, describing goods produced with the same resources pertains to a concept related to production rather than consumer choice, which does not capture the essence of substitutes.