1. Write a 4- to 5-page essay that addresses the following FOUR questions on the market for milk. (For this Case, keep it simple; don't worry about different brands, etc.)
2. Explain what happens to price and quantity of milk when the following events occur (you do not need to analyze the event itself but rather determine the effect of the event on supply and demand of milk):
3. A scientific study shows that consumption of milk is beneficial for healthy bones.
There is an outbreak of mad cow disease.
The price of almond milk decreases.
In order to promote healthy families, a price ceiling on milk is implemented.
Suppose Johnny drinks 4 cups of milk every day no matter what the price. What kind of elasticity does it have?
Suppose that when the price of milk increases by 40%, the percentage change in quantity demanded by consumer is reduced by 10%.
Calculate the elasticity.
Based on your answer to Question 3, What happens to total revenue when the price of milk is increased. Why?