Respuesta :
If service stations raise the price of gasoline and experience a decrease in demand for automobile tires, then gasoline and tires are Complementary goods .
Meaning of Complementary Goods
An object used in combination with another product or service is a complementary good or service. Usually, when consumed alone, the complementary good has little or no value. Still, when paired with another good or service, it adds value to the overall value of the bid. A product may be considered to be complementary if it shares a beneficial relationship with another product. An ideal example could be a sharpener and eraser given away with a box of pencils.
The complementary goods have a nature of joint demand, and it allows interaction since the consumer craves for the second product when the price of the first commodity fluctuates. In economics, this connection is termed as negative cross-elasticity of demand.
Explanation→
Hence, as the product's price rises, the user's demand for the replacement product declines. It is because customers are reluctant to buy the supplement alone. Therefore, the market price of the complementary good or service can decline as consumer demand weakens.
Complementary goods can either be weak ones or strong ones. The weak ones have low cross-elasticity of demand. For instance, if the coffee price rises, it will only have a marginal impact on reducing cream's consumption.
Complementary goods are different from substitute goods, which are different goods or services that satisfy the same consumer needs. The additional products would have a negative cross- elasticity of demand.
Impact of complementary goods :
If the price of one good increases, the market will decrease for both complementary products. The closer the products are to it, the higher will the cross elasticity of demand be. If they are weak complementary goods, then demand will be low on cross-elasticity.
Learn more about Complementary goods :
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