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If petrol prices double, what happens to: a. Demand for diesel cars, b. Demand for electric cars, c. Demand for car accessories, d. Demand for public transport?
Concept
Other Determinants of Demand
Show Answer
| Item | Related to petrol cars as | Demand |
|---|---|---|
| a. Diesel cars | Substitute | Rises |
| b. Electric cars | Substitute | Rises |
| c. Car accessories | Complementary (if meant for petrol cars) | May fall |
| d. Public transport | Substitute | Rises |
- a. Running a petrol car becomes costly, so some buyers pick diesel cars.
- b. Electric cars need no petrol, so more people switch to them.
- c. If the accessories are for petrol cars, fewer people buy and use petrol cars, so demand may fall. Accessories that fit all cars (petrol, diesel or electric) may not be affected much, so the effect depends on the type of accessory.
- d. Driving becomes costly, so more people use buses and the metro.
