Suppose domestic beef producers face demand of Q_D = 1000

Question

Suppose domestic beef producers face demand of Q_D = 1000 - 5P.In the very short run 500 head of beef are produced.Suppose mad cow strikes a portion of the national herd and the amount brought to market falls to 400.The price per head will rise by

Quizplus · Accepted Answer

In the very short run, supply is perfectly inelastic. Initially, Q = 500, so 500 = 1000 - 5P, solving gives P = 100. After the shock, Q = 400, so 400 = 1000 - 5P, solving gives P = 120. The price rises by 20.

Suppose Domestic Beef Producers Face Demand of QD = 1000