Supply and Demand Equations for White Wines Accounting Assignment Help

Assignment Task

Task

A vineyard produces a range of premium white wines. One particular year, the growing conditions for white wine grapes are particularly good, leading to excessive white wine production above what would normally be expected. As warehouses and bottle shops which store and then sell this particular wine have limited capacity, the vineyard needs to clear this excess stock and does so by reducing the average price of each bottle of wine by $9 per bottle. 
Your task is to determine the consequences of the $9 price reduction. 
The supply and demand equations are given by Demand Equation: p = 144 — 1 laq Supply Equation: p = 0.000025q2 + 6bq + 25 
where q is the number of customers (in hundreds per year) ; p is the price of a bottle in dollars. a and b are coefficients to be chosen below. 
Steps to complete to undertake the investigation I. Obtain two random numbers for a and b between 0.1 and 0.9 inclusive. Use the Excel random function =Rand() or the RANDOM key on your calculator. 2. Find the equilibrium price and quantity algebraically, without the price decrease. 3. Update the demand equation to include the $9 price decrease. 4. Use algebra to find the new equilibrium price and quantity. 
 

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