Effect of Related Goods on Demand Curve: Complementary Goods

Complementary goods are products used together, like gasoline and gasoline cars or a tennis racket and a tennis ball.

When the price of one product increases, it decreases the demand for its complement, assuming all other factors remain constant.

And, when the price of one product decreases, it increases the demand for its complement.

Consider the demand curve of gasoline cars taking gasoline as a complementary good.

If gasoline prices rise, consumers might be discouraged from buying gasoline cars.

Instead, they might buy an electric car, a substitute, even if the gasoline car's price remains the same.

This shifts the demand curve for gasoline cars to the left.

On the other hand, suppose the price of gasoline decreases. More consumers might opt to purchase gasoline cars because operating them becomes more affordable.

This shifts the demand curve for gasoline cars to the right, indicating a surge in demand.

In essence, the price of complementary goods is inversely related to the demand for a product.