ECONOMICS
MARKETS AND PRICES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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supply of petrol will fall because petrol is in joint supply with tyres.
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demand for crude oil to produce petrol will fall because the demand for oil is derived from the demand for petrol.
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demand for car tyres will rise because tyres and petrol are in composite demand.
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demand for existing types of tyre will fall because they are in joint demand with the new tyres.
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Detailed explanation-1: -Rubber is an input used in the production of auto tires. Hence, if the rubber price rises, the cost of producing tires will increase, and the supply of auto tires will decrease.
Detailed explanation-2: -3 The income elasticity of demand for bus travel is − 1.5. This means that A a 10% increase in fares will lead to a 15% decrease in passengers.
Detailed explanation-3: -Whenever several items are required to make a particular commodity, the demand for various commodities is termed as the ‘Derived Demand’. For example, the demand for building is a direct demand and demands for cement, bricks, sand, timber, labour, etc., are called as derived demands.
Detailed explanation-4: -Under a price mechanism, if demand increases, prices will rise, causing a movement along the supply curve. For example: the oil crisis of the 1970s drove oil prices dramatically upwards, which in turn caused several countries to begin producing oil domestically.