ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When the price of a complementary good falls, the quantity demanded of the other product rises. There exist an inverse relationship between the quantity demanded and the prices of complementary goods. For example-When the prices of petrol falls there is an rise in the quantity demanded of cars.

Detailed explanation-2: -These are usually consumed together, and thus fluctuation in prices of complementary goods will generally shift the demand curve. That means higher the price, lower the demand. It determines the law of demand i.e. as the price increases, demand decreases keeping all other things equal.

Detailed explanation-3: -Complementary Goods and Cross Elasticity of Demand Complementary goods will have a negative cross elasticity of demand. If the price of one good increases, demand for both complementary goods will fall.

Detailed explanation-4: -Demand for complementary goods is called Joint Demand. Joint Demand is the demand in which goods are related in such way that an increase in the demand for one causes an increase in the demand for the other.