3) (8 points) Suppose you work for the Wisconsin Milk Marketing Board and you are interested in determining the structure of the market demand for a unique aged cheddar cheese made only in Wisconsin. You want to do this to evaluate how sensitive consumers of this cheese are to changes in price and to assist Wisconsin cheesemakers in determining their optimal pricing point. You collect the necessary sales data and you estimate a statistical model showing the relationship between market price and the amount of this special aged cheddar cheese (measured in 1,000 lbs) sold monthly. This demand relationship is shown in Figure 1 below. The current market price is $7.00/lb and 150,000 Ibs was sold last month at that price. Market Demand For Wisconsin Aged Cheddar Cheese 10,00 3.00 150 225 Thousand Lba. a) [4 pts] Next year a new cheese plant will come on-line and will dramatically increase the capacity of the aged cheddar industry in Wisconsin. This increase in supply is anticipated to cause the market price to decrease to $3.00/lb and your estimate is that the monthly amount of cheese that will be sold at this new price will be 225,000 lbs. i. Use the total revenue test and show whether demand is price elastic or inelastic