Question

1

Part 1: Use the line drawing tool to draw a demand curve for red wine. Label this line "D0." Part 2: Suppose researchers discover that there are antioxidants and other life-enhancing substances in red wine. As a result, the general public (being very health conscious) increases its preference for consuming red wine. Use the copy tool to show what happens to the demand curve for red wine after the announcement of the benefits of red wine. Label the new demand curve "D1." Hint: Assume all else is held constant.

2

Bishop, California is a small town located in the High Sierras between Death Valley and Mammoth Lakes. In Bishop, there is only one pizza parlor, the Pizza Factory. The following table contains information about the supply of pizza on a Friday night in Bishop. Part 1: Use the multi-point line tool to plot the supply curve for pizza and label it "S0." Part 2: Use the vertical drop line tool to identify how many pizzas the Pizza Factory is willing to make if the price of a pizza is $40, $25 and $10. Identify these points on your supply curve "a," "b," and "c," respectively. Price of a large pizza Quantity of large pizzas supplied $50 120 $40 100 $30 80 $25 50 $20 45 $15 20 $10 10 $5 0

Answer 1

1. Tastes and preferences of consumers is a demand determinant. Due to the positive health effects of red wine, the demand curve will shift to the right (increase). The equilibrium price will increase to p₁ from p₀. The equilibrium quantity will increase to q₁ from q_0.

_2.