Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 12

Assume the market for wine is functioning at its equilibrium. For each of the following situations, say whether the new market outcome will be efficient or inefficient.
a. A new report shows that wine is good for heart health.
b. The government sets a minimum price for wine, which increases the current price.
c. An unexpected late frost ruins large crops of grapes.
d. Grape pickers demand higher wages, increasing the price of wine.