Question

Oregon growers of Willamette Valley Pinot Noir wine grapes just experienced a significant smoke event from the recent wildfires and as a consequence, there will be much less wine made this year for this growing region. This supply shock will shift the supply curve for Oregon Pinot Noir wines, and the demand curve for Burgundy Pinot Noir wines in France (which is a substitute for OR wines). Draw two simple graphs demonstrating these shifts in the Supply of OR wines and the Demand for French wines and then in words, briefly explain what these shifts mean in terms of the OR and French wine markets.

Answer 1

Decrease in supply of wine in Willa eternal Valley and increase in demand for French wine( substitute good)

In the left graph----

supply curve shifts leftward due to prohibition measures of smoke fire . Quantity of wine decreases from Q to Q'

In the right graph----

Demand curve shifts rightward due to increase in demand for substituted French wine,due to this qty demanded increases from Q to Q'