Question:
(a) With the help of diagrams, explain how the price and quantity demanded or supplied of fuel will change under the different scenarios:
(i) Consumers expect a future rise in prices of fuel;
(ii) Social and Political instability in an oil producing country; and
(iii) A new substitute to fuel - i.e. liquefied petroleum gas is introduced in the market.
(b) Using the concept of elasticity, distinguish between inferior, normal and luxury goods.
(c) Describe what is meant by cross elasticity of demand and price elasticity of demand.