The Toyota Prius is a gasoline-electric hybrid car that gets 54 miles to the gallon. An article in the Wall Street Journal notes that sales of the Prius have been hurt by low gasoline prices and that: "Americans are now more likely to trade in a hybrid or an electric vehicle for an SUV." Does the article indicate that gasoline-powered cars and gasoline are substitutes or complements? Briefly explain.

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28 June, 07:08

The Toyota Prius is a gasoline-electric hybrid car that gets 54 miles to the gallon. An article in the Wall Street Journal notes that sales of the Prius have been hurt by low gasoline prices and that: "Americans are now more likely to trade in a hybrid or an electric vehicle for an SUV." Does the article indicate that gasoline-powered cars and gasoline are substitutes or complements? Briefly explain.

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Maximilian Barton · Answer 1

In the article since Toyota Prius is partly run by fuel it's sale is hurt by lowering of gasoline price. So more gasoline leads to less Toyota Prius sales. This indicates substitution.

On the other hand considering wholly gasoline powered cars, when prices of gasoline goes down, more gasoline is purchased and people tend to trade in their Toyota Prius for gasoline cars. In this case relationship is complimentary as increase in sale of gasoline leads to increase in sale of gasoline cars.