Question

The market demand for milk in Country X is 18 billion gallons per month, but the supply is 10 billion gallons per month. What must happen in
order to achieve market equilibrium?
ОА The monthly supply of milk must increase by 8 billion gallons.
OB. The monthly supply of milk must decrease by 28 billion gallons.
OC. The monthly supply of milk must decrease by 8 billion gallons.
OD. The monthly supply of milk must increase by 28 billion gallons.

Answer 1

Answer: А The monthly supply of milk must increase by 8 billion gallons.

Explanation:

The demand is 18 billion gallons and the supply is 10 billion gallons a month. For equilibrium to be reached, the supply needs to reach a level of 18 billion gallons a month because equilibrium means that Supply is equal to Demand.

For the supply to reach this amount per month, it needs to increase by:

= Amount needed - Amount currently supplied

= 18 billion - 10 billion

= 8 billion gallons a month