Answer:
If the marginal cost of a gallon of milk increases, how will the household respond?
C. The household will continue to consume the same amount.
Explanation:
The increase in the marginal cost of a gallon of milk will not greatly alter the quantity of milk consumed by a typical household. Â At this initial point when the marginal cost of a gallon of milk increases, the household is not affected because the seller has not shifted the cost to consumers. Â Even when the marginal cost increase is shifted to the consumers, the quantity required by the household remains the same. Â What may likely change at that stage is that the price at which the a household buys a gallon of milk increases marginally. Â The marginal increase will not distort demand for milk but households can change brands and not the quantity of milk, or at worst, they pay a higher price for a gallon.
