Prices of California Merlot wine (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen.
Which of the following best explains the rising prices of California Merlots?
A) The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left.
B) The demand curve and the supply curve for Merlot have both shifted to the left.
C) The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right.
D) The supply curve for Merlot has shifted to the right more than the demand curve has shifted to the right.
Question 2
The interest rate on a bond is calculated as
A) the coupon times the face value.
B) the coupon divided by the face value.
C) the face value divided by the coupon plus the face value.
D) the face value divided by the coupon.
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