If alternative fuel vehicles are substitutes for petrol vehicles, ﬁrms that manufacture alternative fuel vehicles will be worse off as the demand for petrol vehicles falls.

Question

Quizplus · Accepted Answer

If demand for petrol vehicles falls due to the availability and popularity of alternative fuel vehicles, the firms manufacturing alternative fuel vehicles will not be able to sell their products to the same extent as before, leading to a potential decrease in revenue and profitability.

If Alternative Fuel Vehicles Are Substitutes for Petrol Vehicles, ﬁRms