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What is the effect of an increase in the price of fuel on the transportation services market where fuel is an input

User Ragy Isaac
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Answer:

The supply will decrease.

Step-by-step explanation:

Here are the options to this question :

A. The supply will increase.

B. The demand will decrease.

C. The supply will decrease.

D. The demand will increase.

Due to the increase in price of fuel, the cost of purchasing fuel would increase and this would make it more expensive to run transportation services. As a result, the supply of transportation services would fall. this would shift the supply curve for transportation services leftward. This would lead to a rise in price of transport services and a decrease in quantity suoplied.

Please check the attached image for a graph explaining this concept

What is the effect of an increase in the price of fuel on the transportation services-example-1
User TheHvidsten
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