What happens to price elasticity of demand if milk prices go up due to inflation?
well if milk is price inelastic, then price rises, including inflation, will have a small effect on demand. but if you are asking about the elasticity of the price demand and how it might change, then logic suggests that the price elasticity will become more elastic as price increases, possibly beyond a certain “tipping-point” price. So for example at 50p per pint a 10% price increase might bring only a 3-4% decrease in demand (it is price inelastic). But at £1.20 per pint a 10% increase might bring a 15% drop in demand as it becomes more price elastic. It will not be as elastic as other goods though because it is seen as essential by mums for their babies. And what about milk tokens?!
