Which Of The Following Will Lead To A Change In The Opportunity Cost Of Buying A Pen And A Pencil?

WRITTEN Past PAUL BOYCE | Updated 6 February 2021

A Complementary good is a production or service that adds value to another. In other words, they are 2 goods that the consumer uses together. For example, cereal and milk, or a DVD and a DVD player.

On occasion, the complementary good is admittedly necessary, as is the instance with petrol and a automobile. However, a complementary proficient can add value to the initial product. For instance, pancakes and maple syrup.

A complementary adept is a proficient that adds value to another, or, a good that cannot be used without each other.
Complementary appurtenances that cannot exist used without each other are known to have a strong relationship. In other words, when the price goes up on one, the need goes downwardly for the other proficient.
Examples include: Tennis Assurance and Tennis Dissonance; PlayStations and Games; Movies and Popcorn; and Mobile Phones and Sim Cards.

Complementary Goods have a negative relationship with each other – which means that when product Ten increases in price, demand for product Y falls. This is because fewer people buy production X due to the higher toll. As a result, fewer people are also buying product Y, which only adds value to product X. In economic jargon, this is known every bit 'negative cross-elasticity of demand'.

Let united states of america consider an iPhone. If its price increases past x pct, this may atomic number 82 to lower levels of demand. At the same time, if fewer people are buying iPhones, then at that place are besides fewer people buying iPhone cases. It is because of this relationship that we can consider these equally complementary goods.

Not all complementary goods are the same. There are 'weak' and 'strong' complementary goods. Weak complementary goods respond to increases in prices in a very limited way. In other words, they are non responsive to increases in prices of complementary goods. However, at that place is some connectedness betwixt the 2.

If we take pancakes and maple syrup as an case – they are two complementary goods. Consumers apply maple syrup with pancakes, but they also use other toppings. For instance, consumers may use bananas or saccharide instead. Therefore, whilst maple syrup is used to complement pancakes, there are many other alternatives that make the relationship between the two weak.

If the toll of maple syrup increases by 10 percent, just the demand for pancakes falls by 1 percent, the relationship is therefore weak. This is because the price increase of the complementary product has niggling effect on the demand on the other.

Potent Complementary Goods have a shut human relationship with each other. That is to say that one skilful is reliant on the other to add value. For example, nosotros take a DVD and a DVD actor. These are known as strong complementary appurtenances because they are pretty useless without one some other.

The relationship between stiff complementary goods is very elastic. In other words, when the cost of DVD players rising, the demand for DVDs is likely to fall. Then we tin can say there is a 'negative cross-elasticity' between them. In fact, if you expect at whatever production that could non exist sold by itself – it is likely a stiff complementary good. So if you could only apply Product X if you first had Product Y, and so they are strong complementary appurtenances.

As we tin can see from the graph below; when the cost of an iPhone decreases, the demand for iPhone cases increases. This is considering the demand for iPhones increases equally more consumers are buying it at the lower prices. In turn, those same consumers are demanding iPhone cases – which translates into high sales.

Complementary Goods Graph

Complementary appurtenances are goods which rely on each other to add value. There are a large number of complementary goods which are necessary in guild for the other to work. For example, petrol is needed for cars to work. However, there are also weak complementary goods that are non necessarily needed in order to function. An iPhone does not need a phone case in club to work, but is still classed as a complementary good. Other examples include:

Lawn tennis Assurance and Tennis Racket
Mobile Phones and Sim Cards
Petrol and Cars
Burger and Burger Buns
PlayStation and Games
Movies and Popcorn
Shoes and Insoles
Pencils and Notebooks

What are complementary products?

A Complementary good tin be a product or service that is sold separately that adds value to another. In other words, they are two or more goods that are used together.

What is complementary and substitute goods?

Substitute appurtenances are 2 goods that can exist used inorth place of i some other, for example, Dominos and Pizza Hut. By dissimilarity, complementary goods are those that are used with each other. For example, pancakes and maple syrup.

The key difference is that substitute goods replace 1 another, whilst complementary goods add value to the other.

What is complementary goods case?

Some examples of complementary goods include:

1. Tennis Assurance and Tennis Racket
two. Mobile Phones and Sim Cards
three. Petrol and Cars
4. Burger and Burger Buns
five. PlayStation and Games
6. Movies and Popcorn
7. Shoes and Insoles
eight. Pencils and Notebooks

Source: https://boycewire.com/complementary-goods-definition/

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