Question

Is complementory goods positive relation or negative relation?

Answer 1

Answer:

Explanation:

In economics, a complementary good is a good whose appeal increases with the popularity of its complement. Technically it displays a negative cross elasticity of demand and that demand for it increases when the price of another good decreases.If "A" is a complement to "B" , an increase in the price of "A" will result in a negative movement along the demand curve of "A" and cause the demand curve for "B" to shift in; less of each good will be demanded. This is in contrast to a substitute good whose demand decreases when its substitute's price decreases.

A decrease in the price of A will result in a positive movement along the demand curve of A and cause the demand curve B to shift outward; more of each good will be demanded. The demand of one good is linked to the demand for another good therefore, if a higher quantity is demanded of one good, a higher quantity will also be demanded of the other, and if a lower quantity is demanded of one good, a lower quantity will be demanded of the other.

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