Complementary good

Article summary

: as the price of goods Y rises, the demand for good X falls. In economics, a complementary good is a good whose appeal increases with the popularity of another good, which is known as its complement. Technically, it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases. If A is a complement to B , an increase in the price of A will result in a negative movement along the demand curve of A and cause the demand curve for B to shift inward; less of each good will be demanded. Conversely, a decrease in the price of A will result in a positive movement along the demand curve of A and cause the demand curve of B to shift outward; more of each good will be demanded. This is in contrast to a substitute good, whose demand decreases when its substitute's price decreases. When two goods are complements, they experience joint demand - the demand of one good is linked to the demand for another good. Therefore, if a higher quantity is demanded of one good, a higher quantity will also be demanded of the other, and vice versa. For example, the demand for razor blades may depend on the number of razors in use; this is why razors have sometimes been sold as loss leaders, to increase demand for the associated blades. Another example is that sometimes a toothbrush is packaged free with toothpaste.…

Key claims

No claims recorded.

Discussion questions

1. Summarise the article in your own words. Which single claim would you verify first, and why?
2. Which claim in this article is most likely to be revised as the sources update? How would you check its current status?
3. If two sources disagreed about one of these facts, what would you need in order to trust one over the other?

Bibliography

No sources recorded.