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The consistent rise in petrol prices will lead to:
- a)A rise in the demand for petrol cars, as car and petrol are complementary goods.
- b)A fall in the demand for petrol cars, as car and petrol are complementary goods.
- c)A rise in the demand for petrol cars, as car and petrol are substitute goods.
- d)A fall in the demand for petrol cars, as car and petrol are substitute goods
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
The consistent rise in petrol prices will lead to:a)A rise in the dema...
Complementary goods are goods that are typically used together, When the price of a certain good decreases, the demand for its complementary good will increase.
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The consistent rise in petrol prices will lead to:a)A rise in the dema...
The correct answer is option 'B': A fall in the demand for petrol cars, as car and petrol are complementary goods.
Complementary Goods:
Complementary goods are products that are used together to fulfill a specific need or desire. In the case of cars and petrol, they are complementary goods as cars require petrol to operate efficiently. A car without petrol is essentially useless, and petrol without a car has limited utility.
When petrol prices rise consistently, it is expected to have an impact on the demand for petrol cars. The price of petrol is an important factor influencing consumers' decisions on whether to purchase a petrol car or not.
As petrol prices increase, consumers are likely to consider alternative options to petrol cars. Higher petrol prices make running a petrol car more expensive, leading consumers to explore other substitutes. This can include electric cars, hybrid vehicles, or public transportation options.
Rising petrol prices can also have an income effect on consumers. As the cost of petrol increases, consumers may have to allocate a larger portion of their income towards fuel expenses. This reduces their purchasing power and makes it less affordable to buy a petrol car.
Considering both the substitution effect and income effect, the consistent rise in petrol prices is likely to lead to a fall in the demand for petrol cars. Consumers will be more inclined to opt for more fuel-efficient or alternative options to reduce their reliance on petrol.
The fall in demand for petrol cars can also have broader implications for the automotive industry. Car manufacturers may need to adjust their production and marketing strategies to cater to the changing consumer preferences for more fuel-efficient or alternative vehicles.
In conclusion, the consistent rise in petrol prices is expected to result in a fall in the demand for petrol cars. Consumers are likely to explore alternative options that are more fuel-efficient or utilize alternative energy sources, reducing their reliance on petrol-powered vehicles.
Explanation:
Complementary Goods:
Complementary goods are products that are used together to fulfill a specific need or desire. In the case of cars and petrol, they are complementary goods as cars require petrol to operate efficiently. A car without petrol is essentially useless, and petrol without a car has limited utility.
1. Relationship between petrol prices and demand for petrol cars:
When petrol prices rise consistently, it is expected to have an impact on the demand for petrol cars. The price of petrol is an important factor influencing consumers' decisions on whether to purchase a petrol car or not.
2. Substitution effect:
As petrol prices increase, consumers are likely to consider alternative options to petrol cars. Higher petrol prices make running a petrol car more expensive, leading consumers to explore other substitutes. This can include electric cars, hybrid vehicles, or public transportation options.
3. Income effect:
Rising petrol prices can also have an income effect on consumers. As the cost of petrol increases, consumers may have to allocate a larger portion of their income towards fuel expenses. This reduces their purchasing power and makes it less affordable to buy a petrol car.
4. Overall impact on demand:
Considering both the substitution effect and income effect, the consistent rise in petrol prices is likely to lead to a fall in the demand for petrol cars. Consumers will be more inclined to opt for more fuel-efficient or alternative options to reduce their reliance on petrol.
5. Market dynamics:
The fall in demand for petrol cars can also have broader implications for the automotive industry. Car manufacturers may need to adjust their production and marketing strategies to cater to the changing consumer preferences for more fuel-efficient or alternative vehicles.
In conclusion, the consistent rise in petrol prices is expected to result in a fall in the demand for petrol cars. Consumers are likely to explore alternative options that are more fuel-efficient or utilize alternative energy sources, reducing their reliance on petrol-powered vehicles.
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The consistent rise in petrol prices will lead to:a)A rise in the demand for petrol cars, as car and petrol are complementary goods.b)A fall in the demand for petrol cars, as car and petrol are complementary goods.c)A rise in the demand for petrol cars, as car and petrol are substitute goods.d)A fall in the demand for petrol cars, as car and petrol are substitute goodsCorrect answer is option 'B'. Can you explain this answer?
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The consistent rise in petrol prices will lead to:a)A rise in the demand for petrol cars, as car and petrol are complementary goods.b)A fall in the demand for petrol cars, as car and petrol are complementary goods.c)A rise in the demand for petrol cars, as car and petrol are substitute goods.d)A fall in the demand for petrol cars, as car and petrol are substitute goodsCorrect answer is option 'B'. Can you explain this answer? for Humanities/Arts 2025 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about The consistent rise in petrol prices will lead to:a)A rise in the demand for petrol cars, as car and petrol are complementary goods.b)A fall in the demand for petrol cars, as car and petrol are complementary goods.c)A rise in the demand for petrol cars, as car and petrol are substitute goods.d)A fall in the demand for petrol cars, as car and petrol are substitute goodsCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Humanities/Arts 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The consistent rise in petrol prices will lead to:a)A rise in the demand for petrol cars, as car and petrol are complementary goods.b)A fall in the demand for petrol cars, as car and petrol are complementary goods.c)A rise in the demand for petrol cars, as car and petrol are substitute goods.d)A fall in the demand for petrol cars, as car and petrol are substitute goodsCorrect answer is option 'B'. Can you explain this answer?.
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