Question

Suppose domestic beef producers face demand of QD = 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?

Answer 1

Answer:

The rise in the price per head = 20

Explanation:

Data provided in the question:

Demand: QD = 1000 - 5P

Number of head of beefs produced in the short run = 500

Now,

At Q = 500

500 = 1000 -5P

or

5P = 500

or

P = 100

At Q = 400

400 = 1000 - 5P

or

5P = 600

or

P = 120

Hence,

The rise in the price per head = 120 - 100

= 20