MBA502: Economic Theory and Applications
Jones International University
Module5: Microeconomic Theory and Applications, I
Assignment 5.2: Forum Discussion-
Microeconomic Theory and Current Events
February 10, 2013
In the Academy Award–winning movie Sideways, the lead character, a wine snob, wildly praises pinot noir wine, saying that its flavors are “haunting and brilliant and thrilling and subtle.” Bizarrely, the exuberant views of this fictional character apparently caused wine buyers to flock to pinot noir wines, dramatically shifting the U.S. and British demand curves for pinot noir to the right (similar to the shift shown in Figure 2.2, page 25 of the Farnham text). The demand curve is the graphical relationship between the price of a good and the quantity consumers demand with all other factors influencing demand held constant. It is a negative (inverse) relationship, graphed as a downward sloping line, where an increase in the value of one variable causes a decrease in the value of the other variable. Demand shifters are the variables in a demand function that are held constant when defining a given demand curve, but that would shift the demand curve if their values changed. The change in demand is the change in quantity purchased when one or more of the demand shifters change, pictured as a shift of the entire demand curve. Between October 2004, when Sideways was released in the United States, and January 2005, U.S. sales of pinot noir jumped 16% to record levels (and 34% in California, where the film takes place), while the price remained relatively constant. In contrast, sales of all U.S. table wines rose only 2% in this period. British consumers seemed similarly affected. In the five weeks after the film opened in the United Kingdom, pinot sales increased 20% at Sainsbury’s and 10% at Tesco and Oddbins, which ran a Sideways promotion. This demonstrated a change in the demand shifter of consumer taste...
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