Chapter6: Elasticities
Section: Chapter Questions
Problem 1P
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Can someone help me with the equation to answer this problem?
Imagine you are an economist for the Commerce Department. Buffalo meat has less fat and more protein than beef. There are a number of people for whom beef is not a substitute. For health reasons, they eat only buffalo meat. As a result, the elasticity of demand for buffalo meat is -.75. Because it is profitable, more firms have gone into the business of raising buffalo. As a result, the supply of buffalo meat is 21% higher this year than last. What will be the % change in the price of buffalo meat and what will be the % change in revenues going to those who raise buffaloes?
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