“Using the market supply and demand functions for Syrah given, fill in the template provided with the coefficients for each function. Using the information below, fill in the values for each of the variables except Price of Syrah.
a) When the price of Syrah increases by $1, do supply and demand increase or decrease?
b) By how much? What is the effect on quantity demanded and quantity supplied?
a) b)
Quantity demanded by million bottles.
Quantity supplied by million bottles.
c) “Does a $1 decrease in the price of substitute bottles of wine shift the demand and supply curves to the left or right?
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“Suppose the price of Syrah is currently $22 per bottle. How many bottles will be demanded and supplied monthly?
“If the market price of Syrah falls to $16 per bottle, how many bottles will be demanded and supplied monthly?
How much is the shortage or surplus?
“Trying prices in $1 increments between $16 and $22, at what price and quantity does the market equilibrium occur?
“Will this create a shortage?
”
If the costs of production increase to 123.222 and the price of wine stays at the point determined in part k this create a shortage.
“With the increase in production costs to 123.222, at what price will the market be in equilibrium again?
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