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Demand and Price Elasticity of Demand: Bordeaux Wine

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Increasing the price of complimenting products will lower the demand of the product thus shifting the curve towards the left side. On the other hand, increasing the substitute’ s price would increase the demand of the wine thus shifting the curve towards the right side. The third shift factor is the income of the consumers. Whenever the income of consumers increases, the demand for the product would increase hence the demand curve would shift towards the right. The fourth shift factor is the population of potential buyers. Increasing the market size or the population of the buyers would increase the demand of the product thus shifting the curve towards the right (Braeutigam, K.2005).

The last shift factor is price change expectations. When there is some news report which predicts an increase in future prices of the product would tend to increase the current demand of the product as the consumers would increase the quantity of the product that they would purchase while expecting a price change. This would have an effect of shifting the graph towards the right (Fair, C.

2007). From the case study, there is evidence that supports the idea that demand for Bordeaux wine has shifted over the period. In the region, of Bordeaux merchants give a threat of boycotting wine from the chateaux that are expensive unless the vintners reduce the prices to levels of 2002 (Sage, A. & Pavia, W. 2009). This shows out that the consumers of the product are threatening to reduce their consumption. It also proves that the demand for Bordeaux wine has shifted from 2002 due to the high price of the wine.

Next, early reports argue out that the finishing wine in Bordeaux could be an excellent vintage. For Bordeaux vintners, this is not true since the financial thunderstorms following the past six months have reduced those individuals who felt that they were wealthy to drink chateau la mission at about 5,500 a case. This is a clear indication that the income of the consumers has reduced. A reduction in the income of the consumers would reduce the demand for the product since few individuals would be having money to purchase the product.  

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