Answer to Question #307414 in Microeconomics for Flavu

Question

Draw a diagram showing the effects of an increase in the price of bus journeys on the equilibrium market price and output in the weekly market for e-scooters in the UK.

Answer 1

An increase in the price of bus journeys will lead to increased demand for e scooters since they're substitute goods.

An increase in demand will shift the demand curve to the right causing an increase in the equilibrium market price. This increase in price will lead to an increase in supply of the e scooters.