What are complementary goods? explain how a change in the price of a complementary good can act as a demand shifter.

First, you should understand what a complimentary good is. A complimentary good is good who's consumption aids in the consumption/use of an associated product. For example, consider pencils and erasers as a complement, with pens being a substitute for pencils.An increase in the price of an eraser will cause a decrease in demand for erasers, since less people are willing to buy erasers at this price. This shift in demand for erasers, due to a positive price elasticity, in turn will cause a decrease in demand for for pencils (since the cost of using pencils has now increased). This change will convince more people to switch into using pens.

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