A textile mill can use the same looms and workers to produce 100-metre rolls of curtain fabric or upholstery fabric. Each roll requires the same number of loom-hours and worker-hours. The total production cost of one roll is the same for both products, and this cost per roll remains unchanged over the period shown.
| Product | Previous market price per roll | Current market price per roll |
|---|---|---|
| Curtain fabric | £850 | £1,020 |
| Upholstery fabric | £1,100 | £920 |
Using the information in the table, explain how the price mechanism is likely to reallocate the mill's resources between the two products.
84 exam-style questions on AQA GCSE Economics 1.2 Resource allocation, covering 1.2.1a Markets, 1.2.1b Allocation of resources, 1.2.1c Factor and product markets, 1.2.2a Primary, secondary and tertiary sectors, 1.2.2b Goods and services, 1.2.3a Specialisation and the division of labour, 1.2.3b How and why producers specialise, and 1.2.3c Costs and benefits of the division of labour. Each one has a worked solution and a mark scheme showing where the marks go.