Which pair is a classic example of complementary goods?

• A. Coffee and cream
• B. Tea and biscuits
• C. Butter and margarine
• D. Sunglasses and sunscreen

Answer: (B)

Complementary goods are items that are often used together, so the demand for one rises when the other is purchased. Tea and biscuits illustrate this well because people commonly enjoy them together during a tea break, making the purchase of biscuits more attractive when tea is bought, and vice versa. The fall in the price of biscuits would typically encourage more tea consumption as part of the same experience, showing a negative cross-price effect characteristic of complements. Butter and margarine are substitutes, so a price change in one tends to affect the other in the opposite direction. Sunglasses and sunscreen aren’t a tightly linked pair used together in the same routine, and while coffee and cream can also be a paired choice, tea and biscuits are the classic, widely recognized example of complementary goods.