Ferry journeys and flights between two islands are substitutes. Over one year, the equilibrium air fare and the equilibrium number of flights between the islands both fall. Only one of the changes below has taken place.
Which change is the most likely cause?
Airlines receive a government subsidy for each flight they operate.
Airlines face a sharp rise in the airport charges they pay.
Ferry operators face a sharp rise in the port charges they pay.
Several new firms start running ferry services between the islands.
236 exam-style questions on AQA GCSE Economics 1.3 How prices are determined, covering 1.3.1a Demand and the factors that influence it, 1.3.1b The demand curve, 1.3.2a Supply and the factors that influence it, 1.3.2b The supply curve, 1.3.3a Determining equilibrium price, 1.3.3b Applying diagrams and showing revenue, 1.3.4a Complements and substitutes, 1.3.4b Effects of changes on related markets, 1.3.5a Price elasticity of demand, 1.3.5b Factors affecting price elasticity of demand, 1.3.5c Measuring PED and its implications, 1.3.6a Price elasticity of supply, 1.3.6b Factors affecting price elasticity of supply, and 1.3.6c Measuring PES and its implications. Each one has a worked solution and a mark scheme showing where the marks go.