|
|
PI: The abbreviation for personal income, which is the total income received by the members of the domestic household sector, which may or may not be earned from productive activities during a given period of time, usually one year. Personal income is one of three measures of income reported quarterly (every three months) in the National Income and Product Accounts maintained by the Bureau of Economic Analysis.
Visit the GLOSS*arama
|
|
|
|
                           COMPLEMENT-IN-CONSUMPTION: One of two (or more) goods that provide satisfaction of a want or need when consumed together. A complement-in-consumption is one of two alternatives falling within the other prices determinant of demand. The other is a substitute-in-consumption. An increase in the price of one complement good causes a decrease in demand for the other. A complement-in-consumption has a negative cross elasticity of demand. Complements-in-consumption are two or more goods that satisfy wants or needs when consumed jointly. Satisfaction is greater when both goods are consumed together than when they are consumed separately. Buying and consuming either good by itself is not quite as satisfying as both goods combined. In many cases, if both complement goods cannot be consumed, then neither will be purchased. Buy both, or buy neither. The need for food can be satisfied by consuming a hamburger and french fries. The need for transportation can be satisfied by buying a sport utility vehicle and gasoline. The desire to play golf can be satisfied by purchasing golf clubs and golf balls. Satisfaction is less if only one of each pair is consumed. The price of a complement-in-consumption is part of the other prices demand determinant. A change in the price of a complement-in-consumption causes a change in demand and a shift of the demand curve. An increase in the price of one complement good causes a decrease in demand for the other. A decrease in the price of one complement good causes an increase in demand for the other. Shifting the Demand CurveTo illustrate this process consider two bits of complementary sporting equipment--golf clubs and golf balls. While can be used in its own right, when consumed together they enable a satisfying round of golf. Complement-in-Consumption
Golf Balls | 
|
How is the demand for golf balls affected if the price of golf clubs should change?- A Higher Price: Suppose the price of golf clubs increases. Golf-playing consumers making a recreational decision will undoubtedly react according to the law of demand and decrease the quantity demanded of golf clubs. However, when they purchase fewer golf clubs, then are also inclined to want and need less golf balls. The result is a decrease in the demand for golf balls and a leftward shift of the demand curve. Click the [Price Increase] button to demonstrate.
- A Lower Price: Suppose the price of golf clubs decreases. Golf-playing consumers will also react according to the law of demand, but in this case they increase the quantity demanded of golf clubs. And as they purchase more golf clubs, then are also inclined to want and need more golf balls. The result is an increase in the demand for golf balls and a rightward shift of the demand curve. Click the [Price Decrease] button to demonstrate.
Cross ElasticityClassifying a good as a complement-in-consumption is accomplished in a precise manner using the cross elasticity of demand. The cross elasticity of demand is the relative response of the demand for one good to changes in the price of another good. More specifically, it is the percentage change in the demand of one good due to a percentage change in the rice of another good. A complement-in-consumption is then one with a cross elasticity that is negative, or less than zero. In comparison, an substitute-in-consumption has a positive, or greater than zero, cross elasticity.
Recommended Citation:COMPLEMENT-IN-CONSUMPTION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: May 19, 2025].
Check Out These Related Terms... | | | | | | | |
Or For A Little Background... | | | | | | | | | |
And For Further Study... | | | | | | | | | |
Related Websites (Will Open in New Window)... | |
Search Again?
Back to the WEB*pedia
|
|
|
GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius seeking to buy either a replacement remote control for your television or a replacement nozzle for your shower. Be on the lookout for slow moving vehicles with darkened windows.
Your Complete Scope
This isn't me! What am I?
|
|
|
Rosemary, long associated with remembrance, was worn as wreaths by students in ancient Greece during exams.
|
|
|
"Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not; it is the first lesson that ought to be learned; and however early a man's training begins, it is probably the last lesson that he learns thoroughly. " -- Thomas H. Huxley, Scientist
|
|
AS-AD
Aggregate Supply-Aggregate Demand Model
|
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|
|
