Suppose Julia and Zach Are the Only Consumers of Milk

question 6

Multiple Choice

Suppose Julia and Zach are the only consumers of milk.Julia's demand for milk is defined as Q^d_Julia = 12 - 3P at prices below $4 and zero for prices above $4.Zach's demand for milk is defined as Q^d_Zach = 10 - 2P at prices below $5 and zero for prices above $5.In this case,the market demand curve for milk is:

• A) upward sloping.
• B) a downward sloping straight line.
• C) kinked at a quantity of 2 units.
• D) kinked at a quantity of 1 unit.

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Definitions:

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.

Socially Optimal

A condition or point where the social welfare, including both consumer and producer welfare, is maximized, often considered in the analysis of market efficiency and interventions.

Pure Competition

A market structure characterized by a large number of small firms, homogeneous products, and easy entry and exit, leading to price taking behavior.

Long Run

A period in which all inputs can be adjusted by firms, allowing new firms to enter or exit the industry.