Question

According to the law of demand, by rise in price, demand falls. But in case of petrol, its demand rise with rise in its price. Why?explain.

Answer 1

Diksha,

The demand for petrol is moderately elastic because petrol does not have many substitutes. The people who have their own vehicles does not choose to travel by bus, train or any other mode of transport. So, even if the price of petrol rises, people have to buy it because of lack of substitutes.