Problem
Rapel Valley in Chile is renowned for its ability to produce high quality wine at a fraction of the cost of many other vineyards around the world. Rapel Valley produces over 20 million bottles of wine annually, of which 5 million are exported to the US. Each bottle entering the US is subjected to a $0.50 per bottle excise tax, which generates about $2.5 million in tax revenues. Strong weather patterns have caused unusually cold temperatures, devastating many of the wine producers in that region of Chile. It is appropriate to assume that Chilean and Californian wines are substitutes.
(1) How will this weather pattern affect the price of Chilean wine?
(2) Assuming these same weather patterns did not impact the California wine-producing region, what will be the resulting impact on the market for California wines?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.