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

question 241

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 change in equilibrium quantity will be

• A) greater in the milk market than in the beef market.
• B) greater in the beef market than in the milk market.
• C) the same in the milk and beef markets.
• D) Any of the above could be correct.

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Definitions:

Imposes a Tariff

The action by a government to establish a tax on imported or, occasionally, exported goods.

Korean Imports

Goods and services bought by residents of a country from Korea, which could include electronics, vehicles, and other products.

U.S. Market

The economic environment for buying and selling goods and services within the United States, encompassing all activities of production, promotion, and distribution.

Import Quota

A government-imposed limit on the quantity of a particular commodity that can be imported into a country over a specified period of time, used to protect domestic industries.