Recall the Application About How Changes in Demand Affect the Price

question 135

Multiple Choice

Recall the Application about how changes in demand affect the price of milk to answer the following question(s) .
-According to the Application, the price elasticity of demand for milk is -0.20 and the long-run price elasticity of supply for milk is 2.50. If the demand for milk decreases by 6 percent, the equilibrium price of milk will _______ in the long run.

• A)increase by 2.7 percent
• B)decrease by 2.2 percent
• C)increase by 13.8 percent
• D)decrease by 16.2 percent

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Non-Controlling Interest

A portion of the equity in a subsidiary not held by the controlling company, often representing the share of minority shareholders.

Net Income

The total profit or loss of a company after all expenses, taxes, and costs have been subtracted from total revenues.

Subsidiary

A company that is controlled by another company, typically through majority share ownership.