Editor’s Notice: You’ll have heard that value concept wants a revival. We agree. The financial mind-set has of late been subsumed by mathematical evaluation absent instinct. Happily, Professor Bryan Cutsinger is right here to assist. We’re glad to current this primary in what’s going to [for now] be a month-to-month collection through which Cutsinger presents value concept questions to your consideration.
Professor Cutsinger will likely be current for 2 weeks for suggestions within the Feedback part, serving to you to “clear up” every drawback. We will’t wait to see your responses!
Query 1:
In his e-book, Fundamental Economics, Thomas Sowell (2015) writes, “the worth which one producer is prepared to pay for any given ingredient turns into the worth that different producers are pressured to pay for that very same ingredient” (p. 20). With that quote in thoughts, think about the next state of affairs:
The demand to drink milk rises whereas the demand for milk within the type of cheese, ice cream, and yogurt stays the identical. Assume that the provision of milk is completely inelastic. Clarify why the elasticities of demand for milk in these different makes use of decide how a lot milk will likely be reallocated from these makes use of for direct consumption.
