Final answer:
The doubling of petrol price would result in a decrease in the demand for trips to the Highlands due to both the income and substitution effects. This decrease in demand would also affect the demand for Highland hotel rooms.
Step-by-step explanation:
The effect of a doubling in the price of petrol on the demand for trips to the Highlands can be analyzed through the income effect and substitution effect. The income effect refers to the change in demand due to a change in purchasing power caused by a change in price. In this case, a doubling in petrol price reduces consumers' purchasing power, resulting in a decrease in demand for trips to the Highlands. The substitution effect refers to the change in demand due to a change in relative prices. If the price of petrol doubles, consumers may opt for alternative forms of transportation or choose closer destinations, resulting in a decrease in demand for trips to the Highlands.
The demand for Highland hotel rooms would also be affected by the increase in petrol price. Since the demand for trips to the Highlands is likely to decrease, the demand for Highland hotel rooms would also decrease. However, it is important to consider other factors that may influence the demand for hotel rooms, such as overall tourism demand and preferences for remote or scenic locations.