CONSUMERS SWITCHING TO CLOSE SUBSTITUTES

                                    CONSUMERS SWITCHING TO CLOSE SUBSTITUTES

  The goods with close substitutes have more elastic demand than other products, because consumers easily changes their mind to buy substitute products. Consumers are more focused on incentives. When a substitute product with same quantity of less price always attracts the consumers to purchase. Increase in price of one product leads to increase in the demand of other product.

Example:  Sprite and 7up are close substitutes. If a small price change in Sprite will lead consumers to purchase 7up. As 7up is the close substitute and provide the same quantity. The sales of sprite decrease as the result were 7up sales quantity will be increased

Imagine, you are a employee and you use your bike to go office daily. As the sudden rise in petrol rate end-up you to use public transport. By using public transport you can save money. Along with you there are many who started using public transport. Now the demand of public transport is high.