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The Effect Of Fuel Subsidy Removal On The Prices Of Cars


Personal opinion:

The relationship between cars and Petrol is complementary in nature. Complementary in the sense that, one is needed to augment the other, just like garri and kulikuli.

Going by basic economics principle, there is an inverse price relationship between complementary goods i.e an increase in the price of one results in decrease in the demand for the other. With this, it is conceivable that with increase in the price of petroleum, there will be less demand for cars, hence result in price crash occasioned by excess supply over demand.

Also, from the angle of the Federal government, the rich benefit more from the subsidy. People with ten cars will now find it unfunny fueling the convoy, and this may result in selling off some of the vehicles. This should further increase the supply of cars and drive down the price.

Let’s talk about this, do you see the price of cars crashing? Let’s leave out the Nigerian factor, corruption and base our argument on fact

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