Evaluate the impact of a fall in the price of oil on the market for diesel cars

3 sections:Analysis: what happens to supply/demand as a result?Application: in detail, what drives these changes in supply/demandEvaluation: how likely are these effects? are there any time lags? what factors decrease or increase the effects?
Supply-side effectsReduction in price of factor inputs (state them clearly, e.g. plastics used in cars, cost of running machinery)Supply shifts outwards: more cars provided at the given priceIncreased Q, decreased P
Demand-side effectsReduction in cost of complement (state it clearly, e.g. diesel or petrol): more affordableDemand shifts outwards: more cars demanded at the given priceIncreased Q, increased P
EvaluationWhich effect is larger? Quantity definitely increased, but will price increase or decrease?What if the oil price decrease is only for one quarter?What could the macro effects?

HB
Answered by Hugh B. Economics tutor

1955 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

What is the difference between the long run and short run Phillips curves?


What is Price Elasticity of Demand?


A football club raises all stadium seat prices by 5%. The demand for seats falls by 1% in zone W, by 3% in zone X, by 5% in zone Y and by 6% in zone Z. In which zone is the responsiveness of demand for seats to the price change elastic?


Explain how the UK tax and benefit system is used to redistribute incomes


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning