This winter France had unusually cold weather.Next year's grape crop will be substantially reduced.Select the best statement.
A)The French wine supply increases as price rises.
B)If the demand for French wine is elastic,wine producers experience an increase in total revenue.
C)The initial change in the market creates a surplus of French wine.
D)In the final equilibrium,price and quantity are higher.
E)If the demand for French wine is inelastic,wine producers experience an increase in total revenue.

Question

Quizplus · Accepted Answer

If the grape crop is substantially reduced due to unusually cold weather, it will lead to a decrease in the supply of French wine. If the demand for French wine is inelastic, the decrease in supply will lead to an increase in the price of French wine. Since the demand is inelastic, the increase in price will lead to an increase in the total revenue of wine producers.

This Winter France Had Unusually Cold Weather