Question

California wildfires destroy vineyards across the Napa Valley. This is during the season when wine festivals occur most often all over the country. Demonstrate the effect of these events on the equilibrium price and quantity of wine.

Answer 1

As a result of the wildfire, supply would fall. there would be a leftward shift of the supply curve. the quantity supplied of wine would reduce and price would increase

as a result of the festival, there would be an increase in demand. this would lead to an outward shift of the demand curve. Thus, the quantity demanded would increase and price would increase

taking these two effects together, there would be an indeterminate change in equilibrium quantity and equilibrium price would increase

Step-by-step explanation: