When speaking about the cross relations of demand, an economist may describe two products as being substitutes, complements, or independent commodities. Explain each case and give an example.

Substitutes are products or services that can be used in place of one another to satisfy a consumer's needs or wants. They are generally similar or closely related products that have the ability to replace each other in terms of their function or usage. When the price of one substitute increases, the demand for the other substitute usually increases, since consumers will seek the cheaper alternative. Similarly, when the price of one substitute decreases, the demand for the other substitute usually decreases. Example: Tea and coffee are common substitutes for each other. When the price of coffee increases, people who enjoy both beverages may switch to drinking tea instead, because it becomes a more cost-effective alternative. This increases the demand for tea and decreases the demand for coffee.

Complements are products or services that are usually consumed or used together, so that the consumption of one generally increases the consumption of the other. They are typically related in such a way that owning or using one often requires or enhances the need for the other. When the price of one complement decreases, the demand for both the complement and its paired product usually increases. Conversely, when the price of one complement increases, the demand for both the complement and its paired product usually decreases. Example: Smartphones and data plans are examples of complementary goods. When the price of smartphones decreases, more people are likely to buy smartphones. Since having a smartphone usually requires a data plan to fully utilize its functionality, the demand for data plans will also increase.

Independent commodities are products or services that have no direct relationship with one another in terms of their consumption or usage. Changes in the price or demand for one product have no effect on the price or demand for the other, because they serve different purposes and are not consumed or used together. Example: Umbrellas and toothpaste are examples of independent commodities. A change in the price of umbrellas is unlikely to have any impact on the demand for toothpaste, since these two products serve very different purposes and are not related to each other in terms of consumption or usage.