COMPLEMENT GOOD: In general, one of two (or more) goods that are related in a joint manner. In terms of demand, complement goods are those that provide satisfaction of a want or need when consumed together. In terms of supply, complement goods are those that are simultaneously produced using a given resource. A complement good is one of two ways that goods are related. The other is a substitute good.Goods can be complements in terms of consumption or production.
On the Consumption SideComplements-in-consumption are goods that provide greater satisfaction when consumed together. Buying and consuming either good by itself is not quite as satisfying as both goods combined. In many cases, if both complement goods cannot be consumed, then neither will be purchased. Buy both, or buy neither.The need for food can be satisfied by consuming a hamburger and french fries. The need for transportation can be satisfied by buying a sport utility vehicle and gasoline. The desire to play golf can be satisfied by purchasing golf clubs and golf balls. Satisfaction is less if only one of each pair is consumed. The price of a complement-in-consumption is part of the other prices demand determinant. A change in the price of a complement-in-consumption causes a change in demand and a shift of the demand curve. An increase in the price of one complement good causes a decrease in demand for the other. A decrease in the price of one complement good causes an increase in demand for the other. To illustrate this process consider two tasty complement food products--Super Deluxe TexMex Gargantuan Tacos and OmniCola soft drink. While each is enjoyable in its own right, when consumed together they create a satisfying meal.
On the Production SideComplements-in-production result when the production of one good triggers the production of a secondary good, or bi-product. Both goods are simultaneously produced from the same resource. The production of one good does not exclude the production of the other. In fact, it promotes the production of the other. Produce one, produce both.Agricultural producers frequently generate bi-products when they produce a primary good, such as wheat and hay. Cattle ranchers produce both beef and leather from the same cattle resource. Lumber mills use timber resources to the produce two-by-fours and sawdust. The price of a complement-in-production is part of the other prices supply determinant. A change in the price of a complement-in-production causes a change in supply and a shift of the supply curve. An increase in the price of one complement good causes an increase in the supply of the other. A decrease in the price of one complement good causes a decrease in the supply of the other. To illustrate this process consider the simultaneous production of two goods--two-by-fours and sawdust. Each is jointly produced using the same timber resources. When producers produce one, they produce both.
Check Out These Related Terms... | substitute good | complement-in-consumption | complement-in-production | substitute-in-consumption | substitute-in-production | other prices, demand determinant | other prices, supply determinant | demand determinants | supply determinants | Or For A Little Background... | demand | market demand | demand price | quantity demanded | law of demand | demand curve | change in demand | change in quantity demanded | supply | market supply | supply price | quantity supplied | law of supply | supply curve | change in supply | change in quantity supplied | ceteris paribus | And For Further Study... | market | Marshallian cross | comparative statics | competition | competitive market | consumer surplus | producer surplus | Recommended Citation: COMPLEMENT GOOD, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: December 16, 2025]. |
