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:

Closely Linked

Having a very strong relationship or connection between two or more things.

Doctrine

A belief or set of beliefs held and taught by a church, political party, or other group.

Violent Methods

Approaches or actions that involve physical force intended to hurt, damage, or kill someone or something.

Shark-Infested Waters

Used metaphorically to describe a situation full of dangers and risks, or, literally, waters that have a high population of sharks.