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19 July, 12:33

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

a. one year after the price increaseb. one month after the price increasec. immediately after the price increased. three months after the price increase

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  1. 19 July, 14:55
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    Answer: (A)

    One year after price increase

    Explanation:

    Price elasticity refers to how sensitive the demand for a product is to changes in its price. A product can be either price elastic or inelastic. If an increase in price does not affect the demand, then that product is inelastic. Demand for essential goods such as milk, oil, salt, and gas is inelastic.

    An increase in the price of milk will have little effect on the quantities demanded. Milk is an essential commodity; customers will adjust to the high costs over time. After one year, the demand for milk will be the same before the price increase.
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