Posted by Steven Davis on .
A newspaper story on the effect of higher milk prices on the market for ice cream contained the following: "as a result (of the increase in milk prices), retail prices for ice cream are up 4 percent from last year... and ice cream consumption is down 3 percent." Given this information, compute the price elasticity of demand for ice cream. Will the revenue received by ice cream suppliers have increased or decreased following the price increase? briefly explain.