Consider the market for petrol. Which of the following changes would most likely lead to an increase in the demand for petrol? [Tick the best answer] Group of answer choices A decrease in the price of petrol cars. A decrease in the cost of public transport fares. An increase in income if private car travel is a normal good. Both a and b are correct. Both a and c are correct

The correct answer is: Both a and c are correct.

Here's the step-by-step explanation:

1. A decrease in the price of petrol cars would likely lead to an increase in the demand for petrol. This is because petrol cars and petrol are complementary goods - they are used together. If the price of petrol cars decreases, more people might buy them, and therefore the demand for petrol would increase.

2. An increase in income would also likely lead to an increase in the demand for petrol if private car travel is a normal good. A normal good is a good for which demand increases when income increases. So, if people's income increases, they might choose to travel more by private car (which requires petrol), leading to an increase in the demand for petrol.

3. A decrease in the cost of public transport fares would likely lead to a decrease in the demand for petrol, not an increase. This is because public transport is a substitute for private car travel (which requires petrol). If public transport becomes cheaper, people might choose to use it more instead of travelling by private car, leading to a decrease in the demand for petrol.

The correct answer is "Both a and c are correct."

Here's why:

a. A decrease in the price of petrol cars would likely lead to an increase in the demand for petrol. If petrol cars are cheaper, more people are likely to buy them, and therefore, the demand for petrol to fuel these cars would increase.

b. A decrease in the cost of public transport fares would likely lead to a decrease in the demand for petrol. If public transport is cheaper, more people might choose to use public transport instead of driving petrol cars, which would decrease the demand for petrol.

c. An increase in income would likely lead to an increase in the demand for petrol if private car travel is a normal good. A normal good is a good for which demand increases when income increases. So, if people have more income and private car travel is a normal good, they are likely to drive more and therefore demand more petrol.