What is a complementary good?

A complementary good is defined as a product that is typically consumed together with another good. When the price of one good changes, it can directly affect the demand for its complementary good. For example, if the price of coffee decreases, the demand for cream may increase because many consumers purchase cream to use in their coffee. This relationship illustrates how the interdependence between complementary goods can lead to changes in demand based on price adjustments.

The other choices reflect different economic concepts. The first option refers to goods that are produced together, which describes joint production rather than complementarity. The second option describes the law of demand, focusing on how changes in the price of a good can lead to changes in demand, but it does not specify a relationship between two different goods. Lastly, the fourth option describes substitute goods, which are products that can replace each other in consumption, rather than being used together. By recognizing that complementary goods are used in conjunction with one another, it is clear why this definition is the most accurate.