The Price Elasticity of Demand for Ground Beef Has Been

question 195

Multiple Choice

The price elasticity of demand for ground beef has been estimated to be -1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things unchanged?

• A) total expenditures will remain unchanged
• B) total expenditures will fall by more than 1 percent
• C) demand will fall by 1 percent, but total expenditures will fall by less than 1 percent
• D) total expenditures will rise

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Definitions:

Non-collusive Oligopoly

A market structure where a small number of firms compete independently, without agreements or collusion between them.

Diagram

A visual representation that outlines, explains, or clarifies complex data or relationships using symbols, icons, lines, and texts.

Collusive Oligopoly

A market situation where a few companies control a large market share and agree, often illegally, to fix prices, limit production, or divide markets to maximize profits.

Price Increase

The rise in the cost of goods or services over time or due to market conditions.