Suppose Milk and Cereal Are Compliments and the Demand for Milk

question 38

Multiple Choice

Suppose milk and cereal are compliments and the demand for milk is ,where stands for millions of gallons of milk demanded, stands for the price of milk and stands for the price of cereal.The supply of milk is ,where stands for millions of gallons of milk supplied.The demand and supply of cereal are and ,respectively,where stands for millions of boxes of cereal demanded and stands for millions of boxes of cereal supplied.Suppose the government imposes a $2.00 per gallon tax on milk.The new general equilibrium price of cereal is

• A) $9.66
• B) $9.76
• C) $7.76
• D) $11.76

---

Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting liabilities, representing the ownership interest.

Cumulative

Describes items that are totalled up over a period of time, such as dividends that accumulate if not paid out.

Common Stockholders

Individuals or entities that own shares in a corporation, representing claims on the company's assets and earnings.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with fixed dividends.