A Newspaper Story on the Effect of Higher Milk Prices

question 71

Multiple Choice

A newspaper story on the effect of higher milk prices on the market for ice cream contained the following:
"As a result [of the increase in milk prices], retail prices for ice cream are up 4 percent from last year....And ice cream consumption is down 3 percent."
Source: John Curran, "Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2001.
Based on the information given, what is the price elasticity of demand for ice cream?

• A)0.75 (in absolute value)
• B)1.33 (in absolute value)
• C)12%
• D)We do not have enough information to calculate the elasticity.

Describe the phenomena of forgetting and theories that explain it.

Recognize the practical applications of memory research in everyday life.

Distinguish between procedural and declarative memory.

Explain the significance of self-generated cues in memory recall.

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Definitions:

Excess Profit

Profit earned by a firm that exceeds the normal profit level, often due to monopolistic power or market inefficiencies.

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Monopolistic Competitor

A firm in a market structure where many companies sell products that are similar, but not identical, allowing for competition on factors other than price.

Marginal Revenue

The additional income received from selling one more unit of a good or service.