What Is the Demand Curve?

3. Changes in the price of related goods and services

When the price of complementary goods decreases, the demand curve will shift outwards. Alternatively, if the price of complementary goods increases, the curve will shift inwards. The opposite is true for substitute goods. For example, if the price for peanut butter goes down significantly, the demand for its complementary good – jelly – increases.

Example of a Shift in the Demand Curve

Recall the demand schedule for high-quality organic bread:

Assume that the price of a complementary good – peanut butter – decreases. How would this affect the demand curve for high-quality organic bread?
Since peanut butter is a complementary good to high-quality organic bread, a decrease in the price of peanut butter would increase the quantity demanded of high-quality organic bread. When consumers buy peanut butter, organic bread is also bought (hence, complementary). If the price of peanut butter decreases, then more consumers purchase peanut butter. Therefore, consumers would also purchase more high-quality organic bread as it is a complement to peanut butter.


We can see from the chart above that a decrease in the price of a complementary good would increase the quantity demanded of high-quality organic bread.

Movements Along the Demand Curve

Changes in price cause movements along the demand curve. Following the original demand schedule for high-quality organic bread, assume the price is set at P = $6. At this price, the quantity demanded would be 2000.

If the price were to change from P = $6 to P = $4, it would cause a movement along the demand curve, as the new quantity demanded would be 3000.