Definition
- Complements
- Complements are goods often used together, so a higher price for one lowers the quantity demanded of the other and the cross elasticity is negative.
Example
Can you think of an example of complements?
Printers rise 20 per cent in price and ink sales fall 10 per cent, a cross elasticity of −0.5, because fewer new printers means less ink bought.
Test yourself
Can you name the six types of good you can label from income and cross elasticity?