Scenario 5-3 Milk Has an Inelastic Demand, and Beef Has an Elastic

question 461

Multiple Choice

Scenario 5-3
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 5-3.The equilibrium quantity will

• A) increase in both the milk and beef markets.
• B) increase in the milk market and decrease in the beef market.
• C) decrease in the milk market and increase in the beef market.
• D) decrease in both the milk and beef markets.

---

Definitions:

Inflation

A situation where the average cost of goods and services increases over time, resulting in reduced money buying power.

Steel Industry

A key sector of the economy that deals with the production and supply of steel, an essential material used in construction and manufacturing.

Stock Market

A public marketplace for buying, selling, and trading shares of public companies.

Depression

An extended period of significant decline in economic activity across the economy, characterized by high unemployment, low output, and deflation.