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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 5, Problem 4DQ
Textbook Problem
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A bottle of wine you bought 15 years ago for $20 now has a market value of $1,500. Would you sell your bottle at that price or keep it for an important occasion? Would you purchase another bottle of such old wine at that high price?

To determine

The decision taken by an individual for buying and selling of old wine bottle.

Explanation of Solution

A bottle of old wine is like an antique. Since antiques are not a normal good or inferior goods, like normal good's supply and demand it doesn't affect much by price change. The demand of such old wine bottle varies for person to person.

If a person knows the taste of old wine, he keeps it for the special occasion and if a person doesn't know the tas...

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