Grapes can be used to produce wine or raisins. Which graph in Figure 4-6 best depicts the effects on the U.S. raisin market of a decline in purchases of domestic wine?

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Graph 2 shows a decrease in the demand for domestic wine. This decrease in demand would result in an increase in the supply of grapes available for the production of raisins, leading to a decrease in the price of raisins and an increase in the quantity of raisins sold. Graphs 1 and 4 show no relationship between wine and raisin markets, and graph 3 shows an increase in both demand and price for raisins.

Grapes Can Be Used to Produce Wine or Raisins