How are complements defined in an economic context?

The concept of complements in an economic context refers to goods that are consumed together. When the price of one good rises, it typically leads to a decreased demand for its complement. This occurs because as the price of one product increases, consumers may be less inclined to purchase both items, as the overall cost of using both goods together has increased. An example is the relationship between printers and ink cartridges; if the price of printers goes up significantly, people may buy fewer printers, and consequently, the demand for ink cartridges would also decrease.

This relationship highlights the interdependence of complement goods in consumption, contrasting sharply with other types of goods such as substitutes, which can be used in place of one another. Understanding this interaction between complements helps in predicting consumer behavior and market dynamics when prices fluctuate.