Low Price Elasticity of Car Travel Demand

Steps:

• Road pricing raises the cost of using cars, aiming to reduce road travel and boost rail use.
• The forecast predicts minimal shift to rail despite higher car costs.
• This indicates car travel demand remains strong even with price increases.
• Thus, the demand for car travel is price-inelastic, showing low elasticity.

Why D is correct:

• Price elasticity of demand is the percentage change in quantity demanded divided by percentage change in price; low elasticity means quantity demanded changes little with price rises, so people continue driving despite costs.

Why the others are wrong:

• A: High elasticity for cars would mean demand drops significantly with price hikes, leading to more rail shifts—contradicting the forecast.
• B: Petrol elasticity relates to fuel use, not overall car travel demand affected by pricing.
• C: Low rail elasticity explains rail demand insensitivity but not why car users resist switching.

Final answer: D