Substitute for PED is the change of the

Substitute goods are that two
different goods that can be used for the same purpose. So, if the price of good
increases, the demand for the substitute is more likely to increase. An example
of a substitute good is Android (Samsung) and Apple(iPhone). In a sense that
are close substitutes. If Apple(iPhone) increase their price, it likely that
the demand of Samsung would increase. Complementary goods are products that
consumers buy together. As the price of the good increases, the demand for the
substitute would increase. In addition, if the price goods increase the demand
for complements would decrease. An example would be If the DVD disks prices
increases, the demand for DVD players Would decrease.

Complements for Avocados would be
salads, cause its healthy and has high nutrition, sandwiches cause of the
texture of an avocado would go very well with a sandwich. For substitutes,
there are no direct substitutes for avocadoes however there are multiple products
that can be used for avocados, such as peas, hummus, asparagus, and guacamole.

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Price elasticity of demand (PED)
is that this measures the response of the demand after a price that has a
change of the product. The formula for PED is the change of the quantity of
demand divided by the change in price. Demand elastic is that if there is a
change in price this leads to a greater change in demand. Goods with lots of
substitutes and a competitive market. An example would be, supermarket, they
would put up the prices of their bread but there are many alternatives, this
would make the consumers switch there good. Inelastic demand is that if there
are changes to the price this would lead to a decrease in demand.

Avocados do not really have any
substitutes as the product is unique and there would be no product that would
benefit the consumer in the same way. This would make avocados price inelastic
so if there was a large price increase of avocados there wouldn’t really be a
significant decrease in demand, this would also be the same for commentary
goods because there aren’t any complements to avocados. If the price changes of
the avocados this wouldn’t have a significant effect the quantity demanded of
the good.

Avocados are homogamous because
the good cannot be differentiated. They would naturally fall in the perfect
competition market structure. This depends on how many companies are entering
the avocado market, cause the companies are ranging from countries that are in
tropical countries such as Spain and Peru, so they can produce the avocados to
the best quality. However, not all countries can produce avocados because they
can’t produce avocados efficiently as from the tropical countries.  Firms are small and cannot impact the overall
supply of avocados in the industry. So, the market structure that this is a
sign of a perfect competition.