Question

1) The markets for cars and tyres are closely related. The five largest tyre firms used to make 66% of all

tyres. The entry of more than 250 Chinese firms has reduced the global market share of the largest five firms

to less than 50%. This also changed the price elasticity of demand (PED) for individual firms’ tyres. Some of

these firms are state-owned enterprises and some are in the private sector

(a) Explain what effect more firms producing tyres would have on the PED of individual firms’

tyres. [4]

(b) Analyse, using a demand and supply diagram, the effect of an increase in demand for cars on the market

for tyres. [6]
(only Q B)​

Answer 1

Answer:

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