ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -SUVs rely on gasoline to run. We can, therefore, say that gasoline and SUVs are complementary goods as they are used together. Complementary goods exhibit negative cross-price elasticity of demand. This means that an increase in the price of one good will reduce the demand of its complement.

Detailed explanation-2: -Gasoline and cars are complementary goods because they are used together. If there is an increase in the price of gasoline, the demand for cars will decrease. This will shift the demand curve for cars to the left, leading to a decrease in the equilibrium price and quantity of cars.

Detailed explanation-3: -As gasoline prices fall, the demand for large cars increases; thus, the market shows the large cars market. The demand for large cars shifts to the right due to price falls, thus encouraging more consumption of gasoline-run cars. The higher demand for cars at the existing supply will increase its prices.

Detailed explanation-4: -An increase in consumer income, assuming gasoline is a normal good because when the consumer’s income increases, it will increase the consumption of the consumer and will always shift the demand curve to the right.