solution

In 1996 dairy farmers, hurt by a decade of low milk prices, began reducing

their herds. Subsequently Kenneth Hein, a Wisconsin farmer, said he was getting

$16 per 100 pounds of milk, rather than $12, which he had gotten earlier.16

a. Why did the price increase?

b. Dairy cattle are often fed corn. When Hein got $16 per 100 pounds of

milk, he paid $5 a bushel for corn; but when he got $12 per 100 pounds

of milk, he paid $2.50 a bushel for corn. Does this mean that Hein made

less money when the price of milk was $16 than when it was $12?