Suppose we are considering a consumer who enjoys renting videos. She has two stores near her home, a nationally recognized store with thousands of locations, and a one-location neighborhood store. She prefers the selection at the neighborhood store but, being a student, has to watch her budget carefully.

   The demand curves to the right are her demand for video rentals at the neighborhood store. If the national store lowers prices, her demand for rentals at the neighborhood store would shift back to D2, as shown. For her the two stores are substitutes.

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