Explain what is meant by a substitute good and a complementary good and give an example of each connected with oil. [4]

Ans : Different goods that, satisfy the same needs of the  consumer and, therefore, can be used to replace one another. Different goods & services that can be used to satisfy same needs or wants are called substitute goods. These goods can be replaced for each other. Example of substitute goods for oil is  CNG or Electricity.

When two or more goods are demanded together to satisfy a single needs or wants are called complementary goods. Example : Car & petrol, Car & Car accessories.