Which statement best defines complementary goods?

Which statement best defines complementary goods?

• A. A good whose appeal increases with the popularity of its complement.
• B. A good whose demand increases when the price of a substitute falls.
• C. A good whose demand is unaffected by the price of its complement.
• D. A good that is always an inferior good.

Answer: (A)

Complementary goods are two items that are usually used together, so their demands are linked. If the complement becomes more popular, more people want both goods, which increases the appeal and thus the demand for the other good as well. That idea is exactly what the statement describes: a good whose appeal rises as its complement becomes more popular. This reflects the joint nature of consumption and the negative cross-price elasticity that characterizes complements—when the complement’s value or price improves, demand for the paired good tends to rise. The other ideas don’t fit as well: substitutes have demand that rises when the price of the other falls, the demand for a complement can be affected by its price, and a complementary good isn’t inherently always inferior.

Complementary goods are two items that are usually used together, so their demands are linked. If the complement becomes more popular, more people want both goods, which increases the appeal and thus the demand for the other good as well. That idea is exactly what the statement describes: a good whose appeal rises as its complement becomes more popular. This reflects the joint nature of consumption and the negative cross-price elasticity that characterizes complements—when the complement’s value or price improves, demand for the paired good tends to rise.

The other ideas don’t fit as well: substitutes have demand that rises when the price of the other falls, the demand for a complement can be affected by its price, and a complementary good isn’t inherently always inferior.