What are complements in economic terms?

In economics, complements refer to goods that are typically consumed together, meaning the demand for one good directly influences the demand for the other. For example, if the price of printers decreases, the demand for ink cartridges may rise, as consumers are more likely to purchase both items together. This relationship highlights how the consumption of one product increases the consumption of another, establishing a connection between them in the market.

Understanding complements is crucial for businesses as they can strategize pricing or marketing efforts based on how their products relate to other goods. This relationship contrasts with the other concepts presented, such as substitutes, which are goods that can replace each other, or independent goods, which do not affect each other's demand. By recognizing the nature of complements, one can predict consumer behavior more accurately and manage inventory or promotional strategies effectively.