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Are complementary goods elastic or inelastic?

Are complementary goods elastic or inelastic?

The cross elasticity of demand for substitute goods is always positive because the demand for one good increases when the price for the substitute good increases. Alternatively, the cross elasticity of demand for complementary goods is negative.

What is meant by 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.

What are complementary and supplementary goods?

Supplementary Goods or Complementary Goods are goods that are used together. E.g. shoes and socks, knife and cutting board,… Remember, complementary sounds like complete, so in a sense, the products will complete each other (it would make more sense if they go together).

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Which of the following pairs of goods are likely to be considered complements?

Peanut butter and jelly are complements because they are consumed together on sandwiches, and thus, an increase in the price of one will reduce the demand and the demand for the other good. Similarly, eggs and ham are complementary goods because they are consumed together as common breakfast meal items.

What are the characteristics of complementary goods?

A complementary good is a good whose use is related to the use of an associated or paired good. Two goods (A and B) are complementary if using more of good A requires the use of more of good B. For example, the demand for one good (printers) generates demand for the other (ink cartridges).

Are complementary goods inversely related?

On the other hand, when the reduction (hike) in the price of a related good, results in an increase (decrease) in the quantity demanded of the main product, then the goods are said to be complements. Hence, complementary goods have an inverse price and demand relationship.

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Which of the following would most likely be considered complements?

A. A factor that will cause a shift in demand is when the price of a substitute good changes. As the price of Ford cars increases, consumers will demand more Chevrolets because of the relative price difference.