Answer to Question #81364 in Microeconomics for Benedict Mamili

Question

In the market for public transport, which of the following variables would decrease demand, ceteris paribus?
A. An increase in the price of private motor vehicles.
B. A decrease in the price of private motor vehicles.
C. An increase in price of private motor vehicle service plans.
D. A decrease in the price of bus tyres.
E. An increase in the price of motorbikes, a substitute.

Answer 1

B. A decrease in the price of private motor vehicles. - The correct alternative is

In case of replacement, when the price of one product changes the demand for another company, a reduction in the price of private motor vehicles will lead to a decrease in the demand for public transport.