Final answer:
A substitute is a good or service that can replace another good or service. When the price of a substitute decreases, the demand for the other product decreases as well. Substitute goods have positive cross-price elasticities of demand.
Step-by-step explanation:
A substitute is a good or service that can be used in place of another good or service. For example, electronic books (e-books) can be a substitute for traditional printed books. When the price of a substitute decreases, the demand for the other product decreases as well. Conversely, a higher price for a substitute has the reverse effect.
Substitute goods have positive cross-price elasticities of demand, meaning that when the price of one substitute good increases, the quantity consumed of the other substitute good also increases. On the other hand, complement goods have negative cross-price elasticities, indicating that a higher price for one complement good leads to a decrease in the quantity consumed of the other complement good.