EconomicsNEB 2076 (old course)

Define complementary goods.

2

Answer

Complementary goods are those goods that are used together to satisfy a particular want or need. In other words, they are goods that are consumed jointly, meaning the demand for one good is directly related to the demand for the other. If the price of one complementary good increases, the demand for its complementary good decreases, and vice versa.

For example, a car and petrol are complementary goods. A car cannot run without petrol. If the price of petrol increases, the demand for cars will also decrease because people will find it less affordable to buy cars. Similarly, if the price of cars decreases, the demand for petrol may increase as more people can afford to buy cars and use petrol.

In summary, complementary goods are interdependent in consumption, and changes in the price or availability of one affect the demand for the other.

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