Several domestic cleaning firms leave a city’s market. At the same time, the firms that remain have to pay higher hourly wages to retain their workers.
Before these changes, the market is in equilibrium. Table 1 shows the market demand and supply schedules. Quantities are measured in thousands of cleaning hours per week.
| Price per cleaning hour | Quantity demanded | Quantity supplied before the changes | Quantity supplied after both changes |
|---|---|---|---|
| £18 | 140 | 60 | 30 |
| £20 | 120 | 80 | 45 |
| £22 | 100 | 100 | 60 |
| £24 | 80 | 120 | 80 |
| £26 | 60 | 140 | 100 |
Using Table 1, explain the effect of these changes on market supply and how the market reaches its new equilibrium.
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.