A good that satisfies similar needs and may be consumed as an alternative to another good e.g. olive oil spread instead of butter.
Below is a diagram to show two goods that are substitutes. Therefore consumers perceive these products as practically carrying out the same function as each other. Therefore if there are price changes this will affect the demand of both products. If Good B's price rises this causes consumers to switch towards the cheaper product i.e. Good A. Therefore this diagramatically is represented by an outwards shift in Good A's demand curve at any given price.
If Good B's pricefalls this causes consumers to switch expenditure away from Good A as that is more expensive compared to Good B. Therefore this diagramatically is represented by an inwards shift in Good A's demand curve at any given price.
