A new automated process enables producers of ceramic floor tiles to make more output from their existing inputs. Ceramic floor tiles and vinyl flooring are substitutes. All other influences in both markets remain unchanged.
What is the most likely sequence of changes in the market for vinyl flooring?
The price of ceramic floor tiles falls, so demand for vinyl flooring increases and its equilibrium price and quantity both rise.
The price of ceramic floor tiles falls, so demand for vinyl flooring decreases and its equilibrium price and quantity both fall.
The price of ceramic floor tiles rises, so demand for vinyl flooring increases and its equilibrium price and quantity both rise.
The price of ceramic floor tiles falls, so the supply of vinyl flooring decreases and its equilibrium price rises while quantity falls.
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.