1
Question
What
do you mean by complements? Give examples of two goods which are
complements of each other.
What do you mean by complements? Give examples of two goods which are complements of each other.
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Solution
Those
goods that are consumed together are called complementary goods.
Example: Tea and sugar. If the price of sugar increases, then it will
lead to a decrease in the demand for tea. If the price of tea
increases, then it will reduce the demand for sugar.
The
demand for a good moves in the opposite direction of the price of its
complementary goods. That is,
If
the price of tea (PT)
increases, then the demand
for sugar (DS)
decreases.
If
the price of sugar (PS)
increases, then the demand
for tea (DT)
decreases.
Those goods that are consumed together are called complementary goods. Example: Tea and sugar. If the price of sugar increases, then it will lead to a decrease in the demand for tea. If the price of tea increases, then it will reduce the demand for sugar.
The demand for a good moves in the opposite direction of the price of its complementary goods. That is,
If the price of tea (PT) increases, then the demand for sugar (DS) decreases.
If the price of sugar (PS) increases, then the demand for tea (DT) decreases.
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