Question

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.
The change in equilibrium price will be:
A. greater in the beef market than in the milk market
B. the same in the milk and beef markets
C. greater in the milk market than in the beef market
D. Any of the above could be correct

Answer 1

Answer:C. greater in the milk market than in the beef market.

Step-by-step explanation:

C. greater in the milk market than in the beef market.

Milk has an inelastic Demand, Demand reaction to Price changes is very low, when quantity decreases by 50% the price will have to increase by a huge amount in order to decrease the quantity demanded to a new level.

Beef has an elastic Demand. Small Prices changes causes a huge change in quantity demanded. a small change in price is enough to decrease the quantity demanded to a new level.