Scenario 5-4
Milk has an inelastic demand,and beef has an elastic demand.Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.
-Refer to Scenario 5-4.The equilibrium price will
A)increase in both the milk and beef markets.
B)increase in the milk market and decrease in the beef market.
C)decrease in the milk market and increase in the beef market.
D)decrease in both the milk and beef markets.

Question

Quizplus · Accepted Answer

Since milk has an inelastic demand, a decrease in supply will lead to a significant increase in price. For beef, which has elastic demand, a decrease in supply will also increase the price, but the quantity demanded will decrease significantly.

Scenario 5-4 Milk Has an Inelastic Demand,and Beef Has an Elastic Demand.Suppose