Question 21:UK petrol price jumps above £1.50 as oil costs riseFuel prices have hit record highs in the UK as Russia's invasion of Ukrainecontinues to affect global oil prices.The average price of petrol jumped to £1.51 a litre, while diesel increased to£1.55. The cost of filling a 55-litre family car with unleaded petrol is now £83,or £85 for diesel.The price of Brent crude oil rose by 4.6% to $102 barrel after Western nationsimposed new sanctions on Russia - one the world's largest energy producers.Petrol price movements in the UK are mainly determined by the price of crudeoil, and the exchange rate between the dollar and the pound, because fuel,like oil is traded in dollars. Petrol also has a relatively low price elasticity ofdemand.UK consumers are already paying a high price for fuel, with demand surgingfollowing the easing of Covid restrictions. Steve Irwin, from fuel consultancyfirm Portland, told the BBC that prices had also risen due to concerns over oiland gas pipelines which travel through Ukraine and carry Russian products. Hesaid there was "potential for enormous supply disruption"Source: The BBC [Adapted extract] - March 2022(a) Explain the term price elasticity of demand.(b) Explain using a diagram and the information in the article, why fuelprices in the UK have risen.(c) Analyse the reasons why petrol may have a relatively low price elasticityof demand.(d) Evaluate the extent which rising fuel prices in the economy might affectliving standards.

Demand refers to the quantity of good or service that a consumer is willing and able to buy at a…

Question 21: UK petrol price jumps above £1.50 as oil costs rise Fuel prices have hit record highs in the UK as Russia's invasion of Ukraine continues to affect global oil prices. The average price of petrol jumped to £1.51 a litre, while diesel increased to £1.55. The cost of filling a 55-litre family car with unleaded petrol is now £83, or £85 for diesel. The price of Brent crude oil rose by 4.6% to $102 barrel after Western nations imposed new sanctions on Russia one the world's largest energy producers. -

Question 21: UK petrol price jumps above £1.50 as oil costs rise Fuel prices have hit record highs in the UK as Russia's invasion of Ukraine continues to affect global oil prices. The average price of petrol jumped to £1.51 a litre, while diesel increased to £1.55. The cost of filling a 55-litre family car with unleaded petrol is now £83, or £85 for diesel. The price of Brent crude oil rose by 4.6% to $102 barrel after Western nations imposed new sanctions on Russia one the world's largest energy producers. -

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 2TY

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