Microecon help

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Please help! Review for a test and am so lost!

(1) An article in the New York Times (Oct. 18, 1990) described a successful marketing campaign by the French champagne industry. The article also noted that “many executives felt giddy about the stratospheric champagne prices. But they also feared that such sharp price increases would cause demand to decline, which would then cause prices to plunge.”

a. What mistakes are the executives making in their analysis of the situation? Illustrate your answer with a demand and supply diagram.

  • Microecon help -

    Your question didn't post.

  • Microecon help -

    Having trouble with this question on study guide. Please Help!

    (1) An article in the New York Times (Oct. 18, 1990) described a successful marketing campaign by the French champagne industry. The article also noted that “many executives felt giddy about the stratospheric champagne prices. But they also feared that such sharp price increases would cause demand to decline, which would then cause prices to plunge.”

    a. What mistakes are the executives making in their analysis of the situation? Illustrate your answer with a demand and supply diagram.

  • Microecon help -

    Please look at your post to make sure it does so. You are getting the preamble but not the actual question to post.

  • Microecon help -

    i have the same qustion from mrs yong bloods class please give me the answer by tomaroo don't know how to spell that good

  • Microecon help -

    Higher prices are a result of increasing demand and/or reduction in supply. Higher prices will not cause demand to fall. Prices and quantity demanded are at equilibrium now. Only a change in the demand schedule or the supply of champagne would cause a further change.
    3 years ago

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