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:

Assignable Variation

Variability in a process that can be traced to specific causes, as opposed to random variation.

Control Limits

Statistical boundaries in process control that indicate the maximum and minimum values allowed for process variation to ensure quality.