URGENT - AQA Economics Essay (GCSE)
Hello, could anyone please mark this?
Figure 2 - Falling oil prices
In November 2018 oil prices fell to their lowest level in 8 months because of falling demand. Oil is used to make petrol, plastics and parts of motor vehicles. The fall in oil price could reduce a major cost of motoring for consumers. However, vehicle manufacturers were worried that this price reduction might be caused by a fall in the demand for cars.
Using Figure 2, analyse possible impacts of falling oil prices on the motor vehicles market.
[6 marks]
Falling oil prices may be likely to benefit the motor vehicles market. Demand for oil is a derived demand as it is used to make other things such as petrol. Petrol is a complementary good to cars, as it is often bought alongside them. This means that if the price of petrol decreases, then consumers can buy more of it and will be more likely to purchase a new car. This would thus correspond to an increase in demand for the motor vehicles market, increasing the profits of firms.
However, as demand for oil is a derived demand, a fall in the demand for oil suggests a fall in demand for products made using oil. This means that there has likely been a decrease in demand for cars. As producers are 'worried' about this, this may lead to a lack of confidence in the motor vehicle industry. This may reduce investment (as investors would consider it unprofitable), and thus businesses would not be able to expand (so they could increase profit or benefit from economies of scale) or improve their products. This may lead to an even further decrease in demand for cars, as they are now less desireable.
Figure 2 - Falling oil prices
In November 2018 oil prices fell to their lowest level in 8 months because of falling demand. Oil is used to make petrol, plastics and parts of motor vehicles. The fall in oil price could reduce a major cost of motoring for consumers. However, vehicle manufacturers were worried that this price reduction might be caused by a fall in the demand for cars.
Using Figure 2, analyse possible impacts of falling oil prices on the motor vehicles market.
[6 marks]
Falling oil prices may be likely to benefit the motor vehicles market. Demand for oil is a derived demand as it is used to make other things such as petrol. Petrol is a complementary good to cars, as it is often bought alongside them. This means that if the price of petrol decreases, then consumers can buy more of it and will be more likely to purchase a new car. This would thus correspond to an increase in demand for the motor vehicles market, increasing the profits of firms.
However, as demand for oil is a derived demand, a fall in the demand for oil suggests a fall in demand for products made using oil. This means that there has likely been a decrease in demand for cars. As producers are 'worried' about this, this may lead to a lack of confidence in the motor vehicle industry. This may reduce investment (as investors would consider it unprofitable), and thus businesses would not be able to expand (so they could increase profit or benefit from economies of scale) or improve their products. This may lead to an even further decrease in demand for cars, as they are now less desireable.
Quick Reply
Related discussions
- Gcse aqa english lit
- GCSE remark
- last minute a level study buddy!!!
- Which exam board for GCSE economics ?
- Best resources for a level economics
- URGENT- Spanish A level
- Update on A-LEVEL options
- thinking about a levels ... again :)
- GCSE 2025 Study Buddy
- URGENT - PPE/Econ+Politics at OXFORD/LSE/Warwick/KCL/EXTER chances
- Should I choose history or geography for my gcse options
- OCR GCSE Economics
- Urgent advice on A level choices
- Can you do law with all stem a levels
- Only answer if you’ve done these a level and exambaord
- How to write AQA A-level history questions?
- Urgent - need advice on ppe application
- Which A levels would be best to take?
- Urgent-Should I do A remark for English literature??
- how to revise y11
Latest
Trending
Last reply 1 month ago
12th of May, Edexcel a-level Economics A after exam chat
