WSET DIPLOMA D2 | QUESTIONS AND
ANSWERS | 2026 UPDATE | WITH
COMPLETE SOLUTIONS.
Section 1: Supply and Demand (Qs 1–12)
1. Which combination would most likely cause a sustained increase in
equilibrium price for a wine region?
a) Increased supply and decreased demand
b) Decreased supply and increased demand
c) Decreased supply and decreased demand
d) Increased supply and increased demand of equal magnitude
Answer: b) Decreased supply and increased demand
Rationale: Price rises when supply falls (e.g., frost, mildew) and
simultaneously demand rises (e.g., positive critic scores, social media buzz).
Equal magnitude shifts in the same direction keep price stable.
2. Price elasticity of demand for generic box wine is likely to be:
a) Highly inelastic
b) Unit elastic
c) Highly elastic
d) Perfectly inelastic
Answer: c) Highly elastic
Rationale: Box wine has many substitutes (other boxes, value bottles, even
beer/spirits). A small price increase leads consumers to switch, making
demand elastic.
3. A single-vineyard Pinot Noir from a cult producer exhibits inelastic
demand. This is because:
a) Consumers perceive no substitutes
b) It is a luxury good with strong brand loyalty
c) Supply is perfectly elastic
d) It is sold exclusively via auction
,Answer: b) It is a luxury good with strong brand loyalty
Rationale: Cult wines have few perceived substitutes; loyal buyers pay
premium prices without significantly reducing quantity purchased → inelastic.
4. In the short run, wine supply is relatively inelastic because:
a) Grapevines take years to mature
b) Distribution channels are flexible
c) Consumer tastes change slowly
d) Bulk wine can be sourced globally
Answer: a) Grapevines take years to mature
Rationale: New plantings require 3+ years to produce commercial yields,
limiting immediate response to price increases.
5. A bumper harvest in Australia lowers global bulk wine prices. A Bordeaux
négociant might:
a) Buy more Australian bulk wine to blend
b) Reduce production permanently
c) Increase estate vineyard plantings
d) Only use AOC fruit
Answer: a) Buy more Australian bulk wine to blend
Rationale: Négociants maximize profit by sourcing cheaper fruit when
available, especially for generic or lower-tier blends.
6. The "cobweb model" applies to wine because:
a) Prices adjust slowly to demand changes
b) Current planting decisions affect future supply
c) Marketing budgets are fixed
d) Government sets minimum prices
Answer: b) Current planting decisions affect future supply
Rationale: High prices this year lead to more plantings, which increase
supply 3–5 years later, often causing a price crash → cyclical pattern.
7. A stroke of a famous wine critic gives a previously unknown wine 99
points. Which demand shift occurs?
a) Movement along the demand curve due to price
b) Rightward shift of the entire demand curve
c) Leftward shift of the entire demand curve
d) Perfectly vertical demand
, Answer: b) Rightward shift of the entire demand curve
Rationale: Non-price factor (expert opinion) changes quantity demanded at
every price point. Demand curve shifts right.
8. For a luxury Champagne house, a 10% price increase leads to a 2% drop
in sales. The price elasticity is:
a) -0.2 (inelastic)
b) -2.0 (elastic)
c) -5.0
d) 0
Answer: a) -0.2 (inelastic)
Rationale: Elasticity = %ΔQ/%ΔP = -2/10 = -0.2. Absolute value <1 =
inelastic. Luxury, status-driven products often inelastic.
9. Which is an example of derived demand in wine?
a) Consumers buy more wine during holidays
b) Restaurants buy more wine when diner traffic rises
c) Wine clubs offer discounts
d) Exchange rates affect exports
Answer: b) Restaurants buy more wine when diner traffic rises
Rationale: Derived demand = demand for one good arises from demand for
another. Wine demand depends on restaurant patronage.
10. A producer chooses to allocate 500 cases to list in 20 top restaurants
rather than 5000 cases in supermarkets. This suggests:
a) Inelastic supermarket demand
b) Price elasticity differs by channel
c) Fixed supply at all prices
d) Vertical supply curve
Answer: b) Price elasticity differs by channel
Rationale: On-premise (restaurant) buyers are less price-sensitive (inelastic)
than off-premise (supermarket) buyers. Strategy captures higher margin.
11. If both supply and demand decrease but demand decreases more,
equilibrium:
a) Price rises, quantity falls
b) Price falls, quantity falls
c) Price unchanged, quantity falls
d) Price falls, quantity rises
ANSWERS | 2026 UPDATE | WITH
COMPLETE SOLUTIONS.
Section 1: Supply and Demand (Qs 1–12)
1. Which combination would most likely cause a sustained increase in
equilibrium price for a wine region?
a) Increased supply and decreased demand
b) Decreased supply and increased demand
c) Decreased supply and decreased demand
d) Increased supply and increased demand of equal magnitude
Answer: b) Decreased supply and increased demand
Rationale: Price rises when supply falls (e.g., frost, mildew) and
simultaneously demand rises (e.g., positive critic scores, social media buzz).
Equal magnitude shifts in the same direction keep price stable.
2. Price elasticity of demand for generic box wine is likely to be:
a) Highly inelastic
b) Unit elastic
c) Highly elastic
d) Perfectly inelastic
Answer: c) Highly elastic
Rationale: Box wine has many substitutes (other boxes, value bottles, even
beer/spirits). A small price increase leads consumers to switch, making
demand elastic.
3. A single-vineyard Pinot Noir from a cult producer exhibits inelastic
demand. This is because:
a) Consumers perceive no substitutes
b) It is a luxury good with strong brand loyalty
c) Supply is perfectly elastic
d) It is sold exclusively via auction
,Answer: b) It is a luxury good with strong brand loyalty
Rationale: Cult wines have few perceived substitutes; loyal buyers pay
premium prices without significantly reducing quantity purchased → inelastic.
4. In the short run, wine supply is relatively inelastic because:
a) Grapevines take years to mature
b) Distribution channels are flexible
c) Consumer tastes change slowly
d) Bulk wine can be sourced globally
Answer: a) Grapevines take years to mature
Rationale: New plantings require 3+ years to produce commercial yields,
limiting immediate response to price increases.
5. A bumper harvest in Australia lowers global bulk wine prices. A Bordeaux
négociant might:
a) Buy more Australian bulk wine to blend
b) Reduce production permanently
c) Increase estate vineyard plantings
d) Only use AOC fruit
Answer: a) Buy more Australian bulk wine to blend
Rationale: Négociants maximize profit by sourcing cheaper fruit when
available, especially for generic or lower-tier blends.
6. The "cobweb model" applies to wine because:
a) Prices adjust slowly to demand changes
b) Current planting decisions affect future supply
c) Marketing budgets are fixed
d) Government sets minimum prices
Answer: b) Current planting decisions affect future supply
Rationale: High prices this year lead to more plantings, which increase
supply 3–5 years later, often causing a price crash → cyclical pattern.
7. A stroke of a famous wine critic gives a previously unknown wine 99
points. Which demand shift occurs?
a) Movement along the demand curve due to price
b) Rightward shift of the entire demand curve
c) Leftward shift of the entire demand curve
d) Perfectly vertical demand
, Answer: b) Rightward shift of the entire demand curve
Rationale: Non-price factor (expert opinion) changes quantity demanded at
every price point. Demand curve shifts right.
8. For a luxury Champagne house, a 10% price increase leads to a 2% drop
in sales. The price elasticity is:
a) -0.2 (inelastic)
b) -2.0 (elastic)
c) -5.0
d) 0
Answer: a) -0.2 (inelastic)
Rationale: Elasticity = %ΔQ/%ΔP = -2/10 = -0.2. Absolute value <1 =
inelastic. Luxury, status-driven products often inelastic.
9. Which is an example of derived demand in wine?
a) Consumers buy more wine during holidays
b) Restaurants buy more wine when diner traffic rises
c) Wine clubs offer discounts
d) Exchange rates affect exports
Answer: b) Restaurants buy more wine when diner traffic rises
Rationale: Derived demand = demand for one good arises from demand for
another. Wine demand depends on restaurant patronage.
10. A producer chooses to allocate 500 cases to list in 20 top restaurants
rather than 5000 cases in supermarkets. This suggests:
a) Inelastic supermarket demand
b) Price elasticity differs by channel
c) Fixed supply at all prices
d) Vertical supply curve
Answer: b) Price elasticity differs by channel
Rationale: On-premise (restaurant) buyers are less price-sensitive (inelastic)
than off-premise (supermarket) buyers. Strategy captures higher margin.
11. If both supply and demand decrease but demand decreases more,
equilibrium:
a) Price rises, quantity falls
b) Price falls, quantity falls
c) Price unchanged, quantity falls
d) Price falls, quantity rises
