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Answer to Question #77988 in Microeconomics for Vikul

Question #77988
The price elasticity of demand for petrol used by car drivers in an economy is estimated to be -0.2
Which of the following is the likely reason for the low PED?
- a tax on petrol
- cycle lanes on many roads
- few bus and rail services
- low household incomes
Expert's answer
- few bus and rail services
Low PED is caused by the absence (or lack) of the substitute goods. Bus and rail services are
the substitutes of driving.

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