YourStorecurrently sells milk for $1 perlitre. Friendly Grocers (a competitor) previously reduced their price to $1 perlitrein order to compete. Friendly Grocers has now decided to increase their price to $1.20 perlitreto improve profitability. Sales of milk at Friendly Grocers have fallen dramatically since they increased their price, with reduced revenue and almost no milk being sold.

Which of the following statements is true?

1We can infer that at $1 per litre, the demand for milk is definitely inelastic.

2From the pricing and quantity information relating to Friendly Grocers' milk sales, the midpoint price elasticity demand for milk in this situation would show it to be elastic.

3We can infer that the point elasticity of demand for milk is always elastic.

4The experience of Friendly Grocers' suggests that a 1% increase in the price of milk from $1 per litre would lead to a less than 1% reduction in the quantity demanded.

5We are unable to infer anything about the point elasticity of demand for milk from the information given.