Refer to the Above Diagram for the Milk Market

question 79

Multiple Choice

Refer to the above diagram for the milk market. There would be a shortage of milk whenever the price is

• A) higher than $1.50 per gallon.
• B) higher than $2.00 per gallon.
• C) lower than $1.50 per gallon.
• D) lower than $2.00 per gallon.

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.

Income

The amount of money received by an individual or group over a certain period, often derived from work, investments, or business activities.

Utility Function

A mathematical formula that represents a consumer's preference ranking for various bundles of goods.

Budget Line

A graphical representation that shows all the possible combinations of two goods or services that can be purchased with a given budget, keeping the price of both goods constant.