Suppose That in a Month the Price of Milk Increases

question 33

Multiple Choice

Suppose that in a month the price of milk increases from $2 to $3 a gallon. At the same time, the quantity of gallons of milk demanded decreases from 200 to 190. The price elasticity of demand for milk (calculated using the initial value formula) is

• A) 0.1.
• B) 0.2.
• C) 1.
• D) 10.

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Aggregate Demand

Aggregate demand represents the total demand for all goods and services within an economy at a given overall price level and in a given time period.