Economics Project on: Effect of Price Change on a Substitute Good (Using Local Market Data)
Page 1: Cover Page
• Title: "Effect of Price Change on a Substitute Good (Using Local Market Data)"
• Name: [Your Name]
• Class: XI
• Roll No: [Your Roll No]
• School: [Your School Name]
• Subject: Economics
Page 2: Certificate This is to certify that [Student Name] of Class XI has successfully completed the
Economics project titled "Effect of Price Change on a Substitute Good" as prescribed by the CBSE
curriculum for the academic session 2024-2025. The project is original and conducted under my
supervision.
Signature: ___________\ Teacher’s Name: ___________
Page 3: Acknowledgement I would like to express my gratitude to my Economics teacher [Teacher's Name]
for guiding me throughout this project. I also thank my parents and local shopkeepers for their support in
collecting the necessary data.
Page 4: Introduction This project explores how price changes affect substitute goods in a real-world local
market. Substitute goods are products that can be used in place of each other, like tea and coffee or butter
and margarine. The study uses primary data to demonstrate real consumer behavior.
Page 5: Objectives of the Study
• To define substitute goods and price elasticity.
• To examine the effect of price change on substitute products.
• To collect and analyze real market data.
• To understand consumer response.
• To identify stakeholders affected by price changes.
Page 6: Research Methodology
• Primary Data: Survey conducted at [local market name].
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• Secondary Data: Government reports, articles.
• Tools Used: Questionnaire, graphs, comparative analysis.
• Sampling Method: Random sampling of 30 customers.
Page 7: Concept of Substitute Goods Substitute goods are alternatives to each other. If the price of one
good rises, demand for its substitute increases. Examples:
• Tea vs Coffee
• Colgate vs Pepsodent
• Amul Butter vs Nutralite
Page 8: Understanding Price Elasticity Price elasticity measures how quantity demanded responds to
price changes. Elasticity = (% Change in Quantity Demanded) / (% Change in Price) Higher elasticity means
greater sensitivity to price change.
Page 9: Local Market Survey – Tea vs Coffee
• Product A: Loose Tea – Rs. 220/kg
• Product B: Instant Coffee – Rs. 500/kg
Price Change:
• Tea price increased to Rs. 250/kg
• Coffee sales rose by 20%
Page 10: Table – Monthly Price Comparison
Month Tea Price (Rs/kg) Coffee Sales (Packets)
Jan 220 300
Feb 250 360
Mar 250 365
Page 11: Bar Graph – Effect of Tea Price on Coffee Sales [Insert bar graph showing inverse relationship]
Page 12: Stakeholder Analysis
• Consumers: Shift preference based on price.
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• Retailers: Adjust inventory.
• Producers: Revenue change.
• Government: Tax impact, subsidies.
Page 13: Causes of Price Change
• Inflation
• Supply disruption (e.g., transport strike)
• Increased cost of production
• Seasonal demand
Page 14: Consequences of Price Change
• Increase in demand for substitute
• Profit margin shift
• Brand switching
• Budget adjustment by consumers
Page 15: Remedies and Measures
• Price monitoring by govt
• Consumer awareness
• Offering discounts or combo deals
• Efficient supply chain management
Page 16: Advantages of Price Sensitivity
• Consumer empowerment
• Promotion of competition
• Efficient resource use
Page 17: Disadvantages
• Revenue losses for firms
• Market instability
• Poor product loyalty
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Page 18: Long-Term Implications
• Firms may shift product strategy.
• Consumers develop brand preferences.
• Government may step in to stabilize prices.
Page 19: Short-Term Implications
• Temporary fall in one good’s sales.
• Quick rise in substitute’s demand.
• Instant consumer reaction.
Page 20: Demand Curve of Tea and Coffee [Insert a diagram showing demand curves shifting]
Page 21: Pie Chart – Consumer Preferences Based on 30 responses:
• 60% switched to coffee
• 30% stayed with tea
• 10% no opinion
Page 22: Interpretation of Results The results show a clear substitution effect when tea prices rise. Most
consumers shifted to coffee temporarily.
Page 23: Validity & Reliability
• Data collected from real consumers.
• Cross-verified prices from three retailers.
• Data was consistent over 3 months.
Page 24: Use of Economic Principles
• Law of Demand
• Cross Price Elasticity
• Substitution Effect
Page 25: Limitations of the Study
• Small sample size
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• Limited geographic area
• May not reflect rural behavior
Page 26: Suggestions for Future Research
• Study rural substitute goods
• Use larger sample sizes
• Include branded vs unbranded comparisons
Page 27: Summary of Findings Price rise in tea directly increased coffee demand. This proves high cross
elasticity. Consumers in local markets are price-sensitive.
Page 28: Conclusion The substitution effect is strong in day-to-day markets. A minor change in price can
result in major shifts in consumer demand.
Page 29: Bibliography
• www.rbi.org.in
• www.economictimes.com
• Class XI NCERT Economics Book
• Market Survey Responses
Page 30: Appendix
• Survey Questionnaire
• Raw Data Table
• Photographs of local market (if available)
