Substitute goods are those goods which can be used in place of one another for satisfaction of a particular want, like tea and coffee. Demand for a given commodity varies directly with the price of a substitute good. For example, if price of a substitute good (say, coffee) increases, then demand for given commodity (say, tea) will rise as tea will become relatively cheaper in comparison to coffee.
Complementary goods are those goods which are used together to satisfy a particular want. Demand for a given commodity varies inversely with the price of a complementary good. For example, if price of a complementary good (say, sugar) increases, then demand for given commodity (say, tea) will fall as it will be relatively costlier to use both the goods together.
