Complements

Definition

Complements are goods or services that are typically consumed together because they enhance each other's value. When the price of one complement increases, it tends to reduce demand for both complements.

Related terms

Substitutes: Substitutes are goods or services that can be used in place of each other. For example, tea and coffee are substitutes because people often choose one over the other.

Cross Elasticity of Demand: Cross elasticity of demand measures how sensitive the quantity demanded for one good is to a change in the price of another good.

Joint Demand: Joint demand refers to the demand for two or more goods that are used together. For example, cars and gasoline have joint demand as cars require gasoline to operate.