Fuel-efficient Cars in Hot Demand

In the year 2011, fuel efficient cars were in high demand. Author Sternberg states that as gas prices had risen, the demand of fuel-efficient cars had risen as well. This illustrates the fundamental economic laws of complements and substitutes. Substitutes come into play as fuel-efficient cars are substitutes to non fuel-efficient cars. As the price of gas goes up, the demand for fuel-efficient cars rises, as the demand for non fuel-efficient cars falls. The reason behind this is because non fuel-efficient cars are closer complements to gasoline than fuel-efficient cars. As the price of a complement rises the demand for the other complement falls because consumers don’t want to use the complement alone.

 

http://www.autotrader.com/car-news/fuel-efficient-cars-in-high-demand-for-now-112681

 

 

 

1 Comment »

  1. Patrick Harchik Said,

    October 25, 2015 @ 3:17 am

    I would be interested to see how future exploits of oil in the United States and abroad effect the market for fuel efficient automobiles like hybrids and electric cars. While fuel efficient cars do offer a more eco-friendly alternative to their conventional counterparts, the oil industry is so powerful it is tough to tell if fuel efficient cars will ever become more demanded than non-fuel efficient cars.

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