PRC-3 · Chapter 10 · Question 38 of 70
Cars and petrol are complementary goods. If the global price of petrol suddenly triples, what is the most immediate effect on the automobile market?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The demand curve for cars will shift to the left
Explanation
When the price of a complement (petrol) rises, it makes using the primary good (cars) much more expensive, resulting in a decrease in demand (leftward shift) for cars.
More Demand, Supply and Market Equilibrium MCQs
- Q40A farmer brings highly perishable fresh strawberries to the Sunday market. Since they will rot by Monday, he must sell all of them today…
- Q41What specific terminology defines the total amount of a commodity physically in existence in a warehouse, as opposed to the amount…
- Q42Due to exceptionally favorable weather, a country produces double the normal harvest of cotton. Assuming demand remains strictly…
- Q43The demand for bricks, cement, and construction cranes only exists because there is a high demand for building new houses. This type of…
- Q44To prevent wild price fluctuations in agriculture, a government establishes a 'Buffer Stock'. What action must the government take if…