The Price Elasticity of Demand for Milk Has Been Estimated

question 194

Multiple Choice

The price elasticity of demand for milk has been estimated to be somewhere between 0.49 and 0.63.If a new system of feeding and milking cows yields a 15% increase in the production of milk throughout the country,how will that affect total expenditures on milk,all other things equal?

• A)Total expenditures will remain unchanged.
• B)Total expenditures will fall.
• C)Total expenditures will rise.
• D)The information is insufficient to answer the question.

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