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.

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Definitions:

Ethnographic Interviewing

A qualitative research method used to understand the experiences and cultures of individuals or groups by conducting in-depth interviews in natural settings.

Full Acclimation

The complete process of becoming accustomed or adapted to a new climate, environment, situation, or set of circumstances.

Host Culture

The culture or social environment into which an individual or group temporarily enters and within which they must adapt, often discussed in the context of immigration or study abroad.

Advocates

Individuals or groups who actively support or defend a cause or policy.