Suppose the Demand for Milk Is Relatively Inelastic

question 153

Multiple Choice

Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free-market equilibrium price in the market for milk?

• A)Sales revenue falls.
• B)Sales revenue rises.
• C)Sales revenue remains unchanged.
• D)It cannot be determined without information on prices.

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Definitions:

Commercial Transactions

The exchange of goods, services, or funds in a business context, often governed by legal regulations and agreements.

Strictly Applied

Refers to the rigorous enforcement or adherence to rules, laws, or principles without deviation or exception.

Consideration

Consideration refers to something of value that is exchanged between parties in a contract, making the agreement legally binding.

Gross Inadequacy

A significant disparity or insufficiency, often relating to an offer’s value in a contractual agreement, which may lead to questioning the fairness of the contract.