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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Definitions:

Revaluation Surplus

An increase in the value of an asset that is reflected on the company's balance sheet when the asset is revalued to its current market value, leading to an appreciation in the asset's worth that is not realized through sales.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the IASB that aims at making global financial statements more comparable.

Statement of Financial Position

Another term for the balance sheet, detailing a company's assets, liabilities, and equity at a specific point in time.

IFRS

Global accounting guidelines known as International Financial Reporting Standards are used for the preparation of financial statements.