classic examples of substitute goods include margarine and butter, or tea and coffee. substitute goods not only occur on the consumer side of the market but also the producer side. substitutable producer goods would include: petroleum and natural gas (used for heating or electricity). the fact that one good is substitutable for another has immediate economic consequences: insofar as one good can be substituted for another, the demand for the two kinds of good will be bound together by the fact that customers can trade off one good for the other if they get an advantage by to do so.