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1.3 Price determination in a competitive market

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Question 14

Jet fuel and bitumen are in joint supply during the refining of crude oil. High-speed rail travel is a close substitute for short-haul air travel (which consumes jet fuel).

A government subsidy leads to a significant fall in the price of high-speed rail travel. All other things being equal, which of the diagrams below best illustrates the effect of this price fall on the market for bitumen?

Market Diagrams

Diagram C

Diagram A

Diagram B

Diagram D

1.3 Price determination in a competitive market Questions

  1. A Level
  2. /Economics
  3. /1.3 Price determination in a competitive market