unit amount of both externalities. Comment on the results compared to part (b). (7 marks) 6. In the early 1990s, a study found that moderate daily consumption of red wine reduced the incidence of heart disease in laboratory rats. As a result of national press coverage of the report, the demand for red wine increased dramatically. Assume that the red wine market satisfies all of the attributes of perfect competition. Further assume that red grapes are the most expensive input into the red wine production process. (a) Draw a graph of the market for wine to demonstrate the effect of the report on market equilibrium. Consider only short-run results. Explain your answer. (6 marks) (b) Graph the initial reaction of individual incumbent firms to the increase in market demand. On your graph, identify the firm's revenue and cost structure, including the marginal cost and average total cost curves. Ensure that your graph shows the profit region. Will this result last? Briefly explain why profit occurs. (6 marks) 7. In the secluded town of Reitsville, a real estate consulting firm called Top Realty provides land