Scenario 5-3
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 5-3.The change in equilibrium price will be
A) greater in the milk market than in the beef market.
B) greater in the beef market than in the milk market.
C) the same in the milk and beef markets.
D) may be greater in either the milk market or the beef market.

Question

Quizplus · Accepted Answer

When demand is inelastic, as in the milk market, a decrease in supply leads to a larger increase in price compared to a market with elastic demand, like the beef market.

Scenario 5-3 Milk Has an Inelastic Demand and Beef Has an Elastic