What are complementary goods?

What are complementary goods?

• A. Urbanization as people move to the cities for jobs
• B. Mercantilism
• C. Complementary goods
• D. Outsourcing

Answer: (C)

Complementary goods are products that are often used together, so when you buy more of one, you tend to buy more of the other. A common example is printers and ink cartridges: if demand for printers grows, demand for ink cartridges usually rises too, because people use them with the printers. This relationship shows up in cross-price elasticity of demand as negative—a price change in one good tends to influence the quantity demanded of its pair in the opposite direction. The other options point to different ideas (where people live, an old trade theory, or moving production to another location), not to how two goods are related in consumption, so the term that best describes the concept is complementary goods.

Complementary goods are products that are often used together, so when you buy more of one, you tend to buy more of the other. A common example is printers and ink cartridges: if demand for printers grows, demand for ink cartridges usually rises too, because people use them with the printers. This relationship shows up in cross-price elasticity of demand as negative—a price change in one good tends to influence the quantity demanded of its pair in the opposite direction. The other options point to different ideas (where people live, an old trade theory, or moving production to another location), not to how two goods are related in consumption, so the term that best describes the concept is complementary goods.