Western Governors University (WGU) ECON5000 C211 Global Economics for Managers Practice Exam

When the price of a complementary good decreases, the demand for both goods is likely to increase because complementary goods are products that are consumed together. A classic example is printers and ink cartridges. If the price of ink cartridges drops, people are more likely to buy printers, as they know the ongoing cost of keeping the printer functioning will be lower. This increased consumption of the first good (the printer) leads consumers to also purchase more of the complementary good (the ink cartridges) since they are used together.

Thus, a decrease in the price of one complementary good increases its demand and subsequently boosts the demand for the other good as well. The reciprocal relationship between these products reflects how prices and consumer behavior interact in the market. Understanding this dynamic is crucial for managers looking to capitalize on pricing strategies involving complementary goods to enhance overall sales.