As if there wasn’t enough bad economic news at the start of 2008, Majestic Wine has been warning wine lovers to stock up early as the price of their favourite tipple is likely to rise considerably during 2008. The company is warning that, due to the strong euro and poor harvests, the price of an average bottle may rise by as much as £1.
Wine lovers find no escape from the woes of world’s economy Times Online (4/1/08)
Majestic warns of champagne price rise Telegraph (4/1/08)
|1.||Using diagrams as appropriate, illustrate the changes taking place in the market for champagne and other wines.|
|2.||Identify the principal determinants of the price elasticity of demand for wine.|
|3.||Discuss the extent to which a £1 rise in the price of a bottle of wine will affect the equilibrium market quantity.|