complementary good

     

A complementary goo or complement good in economics is a good which is consumed with another good; its cross elasticity of demand is negative. This means that, if goods A and B were complements, more of good A being bought would result in more of good B also being bought. An increase in the price of one of the goods will result in a leftward shift of both demand curves; less of each good would be demanded. A decrease in the price of one of the goods will result in a rightward shift of both demand curves; more of each good would be demanded. An example of this would be the demand for hotdogs and hotdog buns. If the price of hotdogs increases, then less hotdog buns would be demanded at any given price given that the total price of the two goods is higher than before. If the price of hotdogs decreases, then more hotdog buns would be demanded at any given price given that the total price of the two goods is lower than before.

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