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. refer to scenario 5-4. the change in equilibrium price will be

Answer 1

The equilibrium price is the market value where the amount of goods provided is equal to the amount of goods necessitated. The scenario in 5-3 tells us that the equilibrium price will increase in both the milk and beef markets because there was an increase in demand and a decrease in supply that will cause an increase in equilibrium price.