Milk and cereal are an example of complementary goods. Which definition best describes this relationship?
1 answer:
The definition that best describes the relationship is goods related in such a way that an increase in price of one leads to a decrease in the demand for the other.
<h3>What are complementary goods?</h3>Complementary goods are goods that are used or consumed together. Examples of complementary goods are pen and a notebook, car and gas.
When the price of a good increases, the demand for the complementary good declines. When the price of a good decreases, the demand for the complementary good increases.
When the price of cereal increases, the quantity demanded of cereal declines and so there would less demand for milk. Thus, the demand for milk declines.
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