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.If the market price for milk is $4.50,market demand is: A) zero units of milk. B) 1.5 units of milk. C) 1 units of milk. D) 10 units of milk.

Question

Quizplus · Accepted Answer

At a market price of $4.50, Julia's demand for milk is: Q^d_Julia = 12 - 3(4.5) = 0. This means that Julia will not buy any milk at this price. Similarly, Zach's demand for milk is: Q^d_Zach = 10 - 2(4.5) = 1. This means that Zach will buy 1 unit of milk at this price. Therefore, the market demand for milk at a price of $4.50 is the sum of Julia's and Zach's demand: Qd = Q^d_Julia + Q^d_Zach = 0 + 1 = 1. Hence, the correct answer is C) 1 unit of milk.

Suppose Julia and Zach Are the Only Consumers of Milk