Scenario 5-5
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 5-5. The equilibrium quantity 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

A decrease in the population of dairy cows and beef cattle will reduce the supply of both milk and beef. Since milk has inelastic demand, the quantity demanded will not change much, leading to a decrease in equilibrium quantity. For beef, with elastic demand, the decrease in supply will lead to a larger decrease in equilibrium quantity.

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