A complementary good is a good or service which is used in conjunction with another good or service. It is given this name in economics because it ‘complements’ the use of another good.
Therefore, if the demand for a good or service increases, the demand for the complementary good will also increase as the two are used together.
On the contrary, if the demand for a good or service decreases, the demand for the complementary good will also decrease.
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Key terms:
Demand – the amount of a good or service that consumers are willing to buy at given prices over a period of time
Quantity demanded – the amount of a good or service that consumers are willing to buy at a specific price over a period of time.