Economics – The allocation of resources - Demand | e-Consult

Answer: Petrol and diesel are substitutes. If the price of diesel increases, consumers will switch to buying more petrol, leading to an increase in the demand for petrol. This will cause the demand curve for petrol to shift to the right.

The rightward shift in the demand curve will result in a new equilibrium point at a higher price and a higher quantity of petrol. The equilibrium price of petrol will increase, and the equilibrium quantity of petrol demanded will also increase. The diagram shows this shift to the right and the corresponding increase in both price and quantity.

• Price: Increases
• Quantity: Increases