Chapter 1 - Supply and Demand

Question 1

Supply

Answer 1

Amount of a good or service available for sale

Question 2

Demand

Answer 2

Willingness of consumers or businesses to buy a good or service

Question 3

When supply exceeds demand…

Answer 3

Prices tend to fall

Question 4

When demand exceeds supply…

Answer 4

prices are likely to increase

Question 5

Social factors that influence the demand for wine

Answer 5

1. Changes in consumption habits
2. Changing consumer preferences
3. Changes in reputation
4. Changes in spending patterns

Question 6

Economic factors that influence the demand for wine

Answer 6

1. Strength of the economy
2. Fluctuations in currency exchange
3. Changes to the market

Question 7

Legislative and political factors that affect wine demand

Answer 7

1. Laws prohibiting or limiting the sale of alcohol
2. Government policies to reduce alcohol consumption
3. Taxation
4. International trade
5. Wine laws

Question 8

Production factors that influence the supply of wine

Answer 8

1. Area under vine

2. Legislation

Question 9

Factors that resulted in reduced vineyard land

Answer 9

1. Vine pull schemes
2. EU restrictions on planting new vineyards
3. Conversion of vineyard land to other uses
4. Abandonment of rural areas

Question 10

Wine lake

Answer 10

Surplus of EU wine in the mid-1980s

Question 11

Vin de pays

Answer 11

System created in France during 1970s that formed the basis of the European PGI system

Question 12

Challenges with over-supply of wine

Answer 12

1. Makes it harder to sell stock

2. May end up with unsold wine in tanks

Question 13

Solutions for over-supply of wine

Answer 13

1. Find new markets for wine

2. Bottle under a different label as a private label wine

Question 14

Challenges for an under-supply of wine

Answer 14

1. Disappointing clients and consumers

2. Financial penalties or canceled contracts