Question

Graph Input Tool Market for Wine 60 Price (Dollars per bottle) 54 Supp 12.00 48 Quantit Demanded 48 Quantity Supplied ttles) Shortage ttles) 12 (Thousands of E42 D 38 30 24 O 18 usands of ttles) Surplus ttles) 36 Thousands of usands of cr and Demand Shifter Supply Shifter Price of Champagne (Dollars per bottle) Price of Grapes (Dollars per pound) 50.00 6.00 0 12 18 24 30 38 42 48 54 60 QUANTITY (Thousands of bottles of wine) Reset the graph to the initial state. Then, for each action described in the following table, indicate which elements on the graph (if any) are affected Check all that apply. (Note: After changing the value in each field, be sure to again refresh back to the initial value before proceeding to the next row in the table.)

Answer 1

A change in demand occurs due to a change in the factors other than price. This cause a shift in the demand curve A change in quantity demanded occur due to change in the price itself. This caused movement along the same demand curve The demand curve shows the negative relationship between price and quantity demanded, thus it is downward sloping The supply curve shows the positive relationship between price and quantity supplied, thus it is upward sloping 1. Entering the price of grapes will affect the supply curve because grapes are intermediate goods to produce wine. Thus, it will shift the supply curve and change the quantity supplied. When supply shifts the shortage in the market will reduce 2. Entering 6 in the price of wine will shift the green line to S6 (downward). As a result, the quantity demanded, and quantity supplied will change. Thus, the gap between quantity demanded and supplied increases and there will be a greater shortage 3. Entering S38 in the price of Champagne will change the demand curve because Champagne is a substitute good for wine. Any change in the price of Champagne will affect the demand for Champagne and wine. Since there is already a shortage in the market for wine, change in the price of Champagne will change the demand for wine and shortage in the market. Demand SupplyGreen QuantityQuantity |SurplusShortage curvecurve Line demanded supplied Entering 3.00 into the price of es field Entering 6.00 into e price field Entering 38.00 into the price of Champagne field In this graph, the values can be changed for fields to be entering a new value or adjusting the existing values by increasing or decreasing. Change in fields will be reflected in the graph. To reset the graph, the fields must be rest using the circular refresh arrow. Hence, the statement is False