Median household income is $50,000 per year.The typical household spends about $125 per year on milk,which has an income elasticity of about 0.07.From this information,we can conclude that

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Since the income elasticity of milk is 0.07, which is less than 1, we can conclude that milk is a necessity and not a luxury. Additionally, the small value of income elasticity indicates that a change in income has a small effect on the quantity of milk demanded, which implies that the income effect from a change in the price of milk is very small. Thus, the correct answer is D.

Median Household Income Is $50,000 Per Year