Researchers at the California Institute of Technology have shown that a person’s enjoyment of wine is heightened if they are told that the wine is an expensive one. So what are the main factors determining the demand for wine? Is it really the taste or is it simply the expectation resulting from the price?
|1.||What are the main factors determining the demand for wine? Assess the relative importance of each of these factors in the overall level of demand.|
|2.||Analyse how utility theory can help to explain the level of demand for more expensive wine.
|3.||How would marginal utility and market demand be affected by the knowledge that bottle of wine is a relatively expensive one?|