The Price Elasticity of Demand for Milk Has Been Estimated

question 119

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 percent increase in the production of milk throughout the country, how will that affect total expenditures on milk, all other things unchanged?

• A) total expenditures will remain unchanged
• B) total expenditures will fall
• C) total expenditures will rise
• D) not enough information is given to answer the question

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Definitions:

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