What are complements in regard to various products?my case study used the examples of Mobil and TOTAL gas companies and gave a sill example of Honey and Butter as being complementary products, can...

What are complements in regard to various products?

my case study used the examples of Mobil and TOTAL gas companies and gave a sill example of Honey and Butter as being complementary products, can you plesase offer some examples please.

Asked on by ummamira

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Complementary products are products that tend to be used with one another.  This means that the price of one of these can affect the demand for the other.  If the price of one complement goes down, people buy more of it.  When this happens, they need to buy more of the other complement.

If we are talking about Mobil Oil, we might say that complements would be various chemicals that they need for refining their crude oil.  In this case, if the price of chemical A goes down, Mobil would be able to buy more of it (all other things being equal).  If that happened, they would need to buy more of chemical B (used in the same process as chemical A).

Or perhaps let us say that the price of producing motor oil goes down.  A complement to motor oil (from the point of view of Mobil) is the plastic bottles that the motor oil is packaged in.  If the price of producing motor oil goes down, the demand for the plastic bottles would go up -- more oil produced means more need for bottles to put it in.

 

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