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Homework answers / question archive / If the price of traditional gasoline cars goes up, then what would economic theory say about the demand for electric cars?

If the price of traditional gasoline cars goes up, then what would economic theory say about the demand for electric cars?

Economics

If the price of traditional gasoline cars goes up, then what would economic theory say about the demand for electric cars?

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From the above question, there is a rise in the prices of traditional gasoline cars. This will cause a fall in the real income of the consumers. Their purchasing power will reduce if the purchase those traditional cars. Thus, the consumer?s pattern of consumption will shift to substitute products so the demand for electric cars will increase.