Asked by Brandon Pimentel on Jun 10, 2024
Verified
Refer to Scenario 5-2. The equilibrium quantity will
A) increase in both the milk and steak markets.
B) increase in the milk market and decrease in the steak market.
C) decrease in the milk market and increase in the steak market.
D) decrease in both the milk and steak markets.
Equilibrium Quantity
The quantity of goods or services that is supplied and demanded at the equilibrium price, where supply equals demand.
Elastic Demand
A situation in which the demand for a good or service significantly changes in response to a change in price.
Inelastic Demand
A situation where the demand for a product does not change significantly in response to price changes.
- Identify the effects of supply and demand changes on market stability.
- Analyze the impact of external factors (e.g., bovine infertility) on market outcomes.
Verified Answer
MH
Maddie HadleyJun 15, 2024
Final Answer :
D
Explanation :
Given that both milk (inelastic demand) and steak (elastic demand) are derived from cows, a decrease in the cow population by 50% would lead to a decrease in the supply of both milk and steak. Despite the differences in elasticity, the immediate effect of a reduced supply is a decrease in the equilibrium quantity available in both markets.
Learning Objectives
- Identify the effects of supply and demand changes on market stability.
- Analyze the impact of external factors (e.g., bovine infertility) on market outcomes.