The answer would be the second option, "A household without children would consume about 1 quart of milk in a week."
This is because the y-intercept is the y-value when x = 0. Plug in the value 0 for x and you get the y-intercept. If x is 0, then there are no kids, but y = 1.03, so 1.03 quarts of milk would be consumed if there were no children.