Final answer:
Complementary goods are goods that are often used together, so that consumption of one good tends to enhance consumption of the other. Examples include cereal and milk, notebooks and pens, or golf balls and golf clubs. Changes in the price of one complementary good can affect the demand for the other complementary good.
Step-by-step explanation:
Complementary goods are goods that are often used together, so that consumption of one good tends to enhance consumption of the other.
For example, cereal and milk, notebooks and pens, or golf balls and golf clubs are all examples of complementary goods. When the price of one complementary good increases, the demand for the other complementary good decreases.
For instance, if the price of golf clubs rises, the quantity demanded of golf clubs falls, and as a result, the demand for complementary goods like golf balls also decreases. Conversely, a decrease in the price of a complementary good has the reverse effect.
This concept is important in economics because it helps explain the relationship between the prices and demands of goods that are typically consumed together.