Complement

Examples of Complement in the following topics:

• Cross-Price Elasticity of Demand

  • The cross-price elasticity may be a positive or negative value, depending on whether the goods are complements or substitutes.
  • If two products are complements, an increase in demand for one is accompanied by an increase in the quantity demanded of the other.
  • If the price of the complement falls, the quantity demanded of the other good will increase.
  • Two goods that complement each other have a negative cross elasticity of demand: as the price of good Y rises, the demand for good X falls.

• Mapping Preferences with Indifference Curves

  • Perfect Complements: The opposite of a perfect substitute is a perfect complement (see ), which is illustrated graphically through curves with perfect right angles at the center.
  • Describe the indifference curves for goods that are perfect substitutes and complements

• Changes in Demand and Shifts in the Demand Curve

  • Shifts in the demand curve are related to non-price events that include income, preferences and the price of substitutes and complements.
  • The demand curve for a good will shift in parallel with a shift in the demand for a complement.

• Limits of Fiscal Policy

  • If they behave as strategic complements,then an expansionary (contractionary) policy of one authority is met by expansionary (contractionary) policies of other.
  • The issue of interaction and the policies being complement or substitute to each other arises only when the authorities are independent of each other.

• Marginal Product of Labor (Revenue)

  • For example, changes in technology or the quantity of other inputs will change the marginal product of labor, and changes in the product demand or changes in the price of complements or substitutes will affect the price of output.

• Ceteris Paribus

  • In this case, as depicted in , a consumer's preferences for the good and his demand for complements and substitutes are being held constant along with other attributes that could potentially impact his demand for a good, such as the good's price.

• Shifts in the Money Demand Curve

• Subsidies and Income Supports

  • Developing Nations: A complement to the above discussion is the effect on poverty and developing nations without the infrastructure to provide subsidies for their own farmers.

• Defining Inflation

  • When looking at individual goods, price changes may result from changes in consumer preferences, changes in the price of inputs, changes in the price of substitute or complement goods, or many other factors.

• Changes in Equilibrium for Shifts in Market Supply and Market Demand