Some Economics Terms

Substitute goods

These goods can be used in place of each other. For example tea and coffee. 

Complementary goods

These goods are used together by a consumer to satisfy a particular want. For example cars and fuel complement each other. 


It is the total quantity of a commodity available with the seller at a given time.


Goods and services vary in their usefulness for the purpose they are required to fulfill. Utility is a measure of this usefulness.

Comparative Advantage

Comparative Advantage is the ability of an entity, for example a firm or even a country, to produce wealth by doing what they do best.  The production of these goods and services will benefit the entity. By focusing on such goods and services the entity is able to trade the surplus for other goods and services which it may need. By knowing the areas in which there is comparative advantage the entity stands to gain and so does its trading partners. Each will produce the goods and services in which they have comparative advantage.


It is believed that competition between firms selling the same products and services will lead to the consumer getting the best price. So competition is struggle between firms to win the patronage of the consumer.

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