Complement

Loading the player...

What is a 'Complement'

A good or service that is used in conjunction with another good or service. Usually, the complementary good has little to no value when consumed alone but, when combined with another good or service, it adds to the overall value of the offering. Also, good tends to have more value when paired with a complement than it does by itself.

BREAKING DOWN 'Complement'

A product can be considered a complement when it shares a beneficial relationship with another product offering. In an economic sense, when the price of a good rises, the demand for its complement will fall because consumers don't want to use the complement alone.

For example, if the price of hot dogs rises so much that people stop consuming them, this will also cause a decrease in demand for hot dog buns. Because the price of hot dogs has an inverse relationship to the demand for hot dog buns, we call them complementary products.

RELATED TERMS
  1. Complementary Currency - CC

    A currency used in combination with other currencies, such as ...
  2. Dog

    One of the four categories or quadrants of the BCG Growth-Share ...
  3. Dog Eat Dog

    Intense competition in a market. Dog eat dog competition most ...
  4. Consumer Goods

    Products that are purchased for consumption by the average consumer. ...
  5. Income Effect

    In the context of economic theory, the income effect is the change ...
  6. Normal Good

    An economic term used to describe the quantity demanded for a ...
Related Articles
  1. Markets

    What is a Complement?

    A good or service that’s used in conjunction with another good or service is a complement.
  2. Markets

    Burger King's New Hot Dogs:Vertical Integration Genius

    Burger King is moving beyond burgers into hot dogs. Here is why this is a smart move.
  3. Markets

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  4. Managing Wealth

    Barking Up The Dogs Of The Dow Tree

    One well-known and successful strategy for cashing in on dividends is the Dogs of the Dow. Here's what you need to know about them.
  5. Trading

    Don't Dump On The Dogs

    Just because a stock is in a slump doesn't mean it's time to sell. Some value managers make a living by investing in "dogs."
  6. Trading

    An Introduction To Complementary Currencies

    There are alternatives to national currencies. Discover complementary currencies and how they work.
  7. Markets

    What Does Price Level Mean?

    Price level is the average of all current prices for goods and services in an economy.
  8. Managing Wealth

    Teaching Financial Literacy To Kids: Goods And Services

    It's important that kids understand how resources are used to provide goods and services, and how they are made, distributed, consumed and exchanged.
  9. Markets

    Sonic Keeps Pace in the Fast-Food Discount Wars

    Sonic (NASDAQ: SONC) has expanded its $5 "Boom Box" full meal deal by adding Loaded Cheddar Dogs as a choice. This marks the latest move in what has become an escalating fast-food war where ...
  10. Investing

    What's a Dog and Pony Show?

    A dog and pony show is a presentation that markets new securities as an initial public offering, or securities on a secondary basis.
RELATED FAQS
  1. How are industrial goods different from consumer goods?

    Understand the difference between industrial goods and consumer goods, and learn the different types of industrial goods ... Read Answer >>
  2. What is the difference between a capital good and a consumer good?

    Learn to differentiate between capital goods and consumer goods, and see why capital goods require savings and investment ... Read Answer >>
  3. What are the "Dogs of the Dow"?

    The Dow Jones Industrial Average (DJIA) is an index of 30 of the most significant, mature and respected companies in the ... Read Answer >>
  4. What are some examples of demand elasticity other than price elasticity of demand?

    Learn about income elasticity of demand and cross elasticity of demand and how to interpret these two measures of demand ... Read Answer >>
  5. Which economic factors most affect the demand for consumer goods?

    Understand how key economic factors such as inflation, unemployment, interest rates and consumer confidence affect the level ... Read Answer >>
  6. Does renters insurance cover dog bites?

    Learn how a renters insurance policy can provide liability coverage for dog bites and how coverage may vary by state and ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center