Scenario 5-2 Milk Has an Inelastic Demand, and Steak Has an Elastic

question 42

Multiple Choice

Scenario 5-2
Milk has an inelastic demand, and steak 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 5-2. The change in equilibrium quantity will be

• A)greater in the milk market than in the steak market.
• B)greater in the steak market than in the milk market.
• C)the same in the milk and steak markets.
• D)unknown without more information.

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Definitions:

Price Floor

A government- or authority-imposed minimum price that can be charged for a good or service, intended to prevent prices from falling too low.

Market Price

The actual selling price of a good or service in the marketplace, determined by supply and demand dynamics at any given time.

Rent Controls

Government-imposed maximums on the rent that landlords can charge tenants.

Price Ceiling

A legally imposed maximum price on a good or service, usually set below the equilibrium price to keep the goods affordable for consumers.