on june 1, davis inc. issued an $75,600, 7%, 120-day note payable to garcia company. assume that the fiscal year of garcia ends june 30. using the 360-day year, what is the amount of interest revenue (rounded) recognized by garcia in the following year? a.$882 b.$5,292 c.$1,323 d.$441

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Answer 1

The amount of interest revenue is $441

An organisation's income from whatever investments it makes or on the debt it holds is known as interest revenue.

When someone deposits money into a savings account and chooses to do nothing with it for several months or years, that is a pretty straightforward example of interest income occurring daily.

Calculating the interest -

75,600 × 7%

= 75600 × 0.07

= 5292

Now, The note was issued on June 1

Therefore -

5292 × 30/360 ( Since June has 30 days)

= 441

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Related Questions

Elasticity is the measure of how producers and consumers react to changes in
A supply is
A supply is
when the quantity of a good supplied does not change as the price changes.
when the quantity of a good supplied increases or decreases as the price changes.

Answers

Price
Inelastic
Elastic

multichannel distribution systems offer companies the ability to expand the sales and marketing coverage however these systems are typically easier to control than a vertical marketing system. true false

Answers

This statement is True. When a single company establishes two or more marketing channels to target one or more client categories, multichannel distribution systems are created.

What is multichannel distribution ?

When a single company establishes two or more marketing channels to target one or more client categories, multichannel distribution systems are created. For businesses operating in vast, complicated markets, such a system has benefits.

It enables the businesses to increase sales and market penetration. It enables businesses to customise their goods and services to meet the unique requirements of various client segments. Potentially higher bottom-line profitability.

When set up and handled effectively, a multichannel distribution system broadens your consumer base and increases sales. Nevertheless, it can be challenging to set up a multichannel distribution system that reduces costs and maximises profit without the appropriate technology, tools, and resources.

You will ultimately raise sales and strengthen your bottom line by diversifying into new channels. The profit you get from those new consumers can completely outweigh any expenditures you incur from establishing new sales channels.

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inancial information is presented below: operating expenses $ 42,000 sales returns and allowances 12,000 sales discounts 3,000 sales revenue 165,000 cost of goods sold 96,000 gross profit would be

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Net income - After taking into account all the information provided, the pretax income on the income statement would be $12,000.

Net income (NI), often known as net earnings, is calculated by deducting sales from cost of goods sold, selling, marketing and administration expenditures, operational expenses, amortization, interest, taxes, and other expenditures. Investors can determine how much a company's revenue exceeds its costs by looking at its net income number.


Operating costs are subtracted from gross income to determine net income.
Details $
sixteen thousand five hundred dollars in sales.
Purchase Discount (3,000)
Sales adjustments and returns (12,000)
One hundred fifty thousand dollars in net sales
Charge for Sold Goods (96,000)
54,000 in gross income
operational costs (42,000)
Operating to Net Income Ratio: 12,000

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a firm in a purely competitive industry has a typical cost structure. the normal rate of profit in the economy is 8 percent. this firm is earning $18 on every $200 invested by its founders. instructions: enter your answers as a whole number. a. what is its percentage rate of return? percent b. is the firm earning an economic profit? (click to select) if so, how large? percent c. will this industry see entry or exit? (click to select) d. what will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium? percent

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a. 9% is its percentage rate of return

b. Yes, the company making a 1% economic profit; 

b. Yes, the company making a 1% economic profit

d. The economy's rate of return is 8%.

Calculation:

a. The percentage rate of return is calculated as follows: Earnings Founders' Investment 100 = $18÷ $200× 100 = 9%

b. Company profit rate - economic profit rate = 9% - 8% = 1% > 0

Yes, the company making a 1% economic profit.

c. In order to compete with others and maintain its competitive nature, the industry will undoubtedly experience entry or exits. There won't be any entry or exits in perfectly competitive markets, and crucial factors are the reason why businesses are allowed to enter and quit for marginal profits.

d. The market will have suppliers, making it difficult to set the product's pricing because the industry is competitive.

As a result, the firm's long-term equilibrium equals the economy's rate of return, which is 8%.

What is its percentage rate of return?

The net gain or loss of an investment over a given time period, stated as a percentage of the investment's starting cost, is known as a rate of return (RoR). 1 You determine the percentage change from the start of the period to the end when computing the rate of return.

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in companies that provide defined benefit plans, if the funding is inadequate to pay the benefits promised, the employees must make up the shortfall. question 8 options: true false

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It is false that in companies that provide defined benefit plans, if the funding is inadequate to pay the benefits promised, the employees must make up the shortfall

What is benefit plans?

A  benefit plan,  can as well be regarded as the pension plan, which is been used in the provision of the guaranteed retirement benefits  that is been agreed to be paid to the employees over a period of time.

It should be noted that this Defined benefit plans is been put into consideration so as to help the employee from the employer and it been been fully funded by the employers.

In conclusion the this plan do come along with the retirement payouts  most of the time and it is been paid using some of the  agreed methods with the consideration about the  employee's salary as well as the age and tenure which define the relationship that both the employer as well as the company is having.

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while viewing a webpage for outdoor gear, drake noticed a graphic display advertising kayaks at low prices. when he clicked on the ad, it took him to a different website where the kayaks were listed for sale. this is an example of what type of internet advertising?

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It drake was browsing a website when he saw an advertisement for cheap kayaks. The advertisement led him to a different website when he clicked on it. An illustration of "paid display" online advertising is this.

A pay and display machine is a type of ticket dispenser used to control parking in parking lots or metropolitan areas. It depends on a user buying a ticket from a machine and posting the ticket on the dashboard, windscreen, or passenger window of the car. The usual information on a printed ticket is the machine's location and operator, the time left, the fee paid, and the expiration time.

One machine may handle several vehicle spaces in pay and display systems, which saves on setup costs in comparison to road-side parking meters. Additionally, this approach should discourage cars from utilizing parking meters that still have time left.

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raynah is frustrated because the feedback she received from her manager didn't explain why she was being demoted. which criterion for effective performance management is missing from barb's feedback?

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Specificity can be described as the criterion that has to do with performance management that is missing from the feedback that Barbs has given.

What is specificity?

This is the term that has to do with the particular reason that would tell us the reason why something is being done. Specificity has to do with the idea that once there is an issue then there has to be a particular reason that would be pinpointed to tell the reason for such.

In this case, the demotion has happened and there is no feedback. The right thing would be to tell her the reason why she is demoted and the ways that she would be able to make amends.

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What type of marketing is generally characterized by limited communications and little or no ongoing relationship between the buyer and seller?.

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A type of marketing that is generally characterized by limited communications and little or no ongoing relationship between the buyer and seller is transactional marketing.

What is transactional marketing?

Transactional marketing is one business strategy that focuses on single "point of sale" transactions. This strategy emphasizes is on maximizing the volume and efficiency of individual sales rather than developing a relationship with the buyer. The advantage of this strategy is the cost-effective strategy to build a sales model. It's because the strategy doesn't focus on brand image and the promotional costs are low. The example of transactional marketing is a shopping channel on TV advertising a new product and provides a phone number or website to buy the product in that moment.

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during a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory? a.average cost method b.lifo method c.fifo method d.cannot tell without more information

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During a period of falling prices, the inventory method generally results in the lowest balance sheet amount for inventory is FIFO Method.

What is FIFO Method?First in, first out (FIFO) is an uncomplicated approach of inventory valuation based on the presumption that commodities acquired or created first are sold first. This implies that older inventory is distributed to customers before fresh inventory, in theory. In order to calculate LIFO (Last-in, First-Out), multiply the cost of your most recent inventory by the quantity of goods sold, as opposed to FIFO (First-In, First-Out), which multiplies the cost of your oldest inventory by the quantity of inventory sold.First-In, First-Out ("FIFO") bases its production costs on the presumption that the oldest products in an organization's inventory have been sold first. The LIFO ("Last-In, First-Out") system substitutes using expenses from the most recent products sold first in a company's inventory.

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The balances in sales returns, allowances, and discounts are subtracted from total revenues when calculating net revenues.

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The receivable balance in the various aging categories (see table below) is multiplied by a reserve rate to determine the allowance for uncollectible accounts.

Which of the following is a discount that lowers the total amount due if the consumer pays within a certain time frame?

Discounts for early payments Offering an early payment discount doesn't affect the price at which the products are sold. Customers may only reduce the overall amount due from you if they pay you within a certain time frame; otherwise, the total amount owing does not change.

What is estimated using the allowance method?

The allowance approach involves crediting allowance for uncollectible accounts and debiting bad debt expenditure to estimate the amount that the company anticipates would be uncollectible. It will debit allowance for doubtful accounts and credit accounts receivable if a certain account becomes uncollectible.

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henry signed an employment contract when she began working for the law firm of hesling and epstein. there was an arbitration clause that was binding in the contract. one month later, he slipped on files his boss had left scattered on the floor. his friend told him he should sue the law firm. if he does, the court will likely:

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Say that the 4th Amendment protects the right to arbitrate disputes. In accordance with the fourth amendment, innocent victims may file lawsuits, but criminal defendants may not.

For the Fourth Amendment to be applicable to a specific set of facts, there must be a "search" and a "seizure," which usually occurs in a criminal case, followed by an effort to use what was seized judicially. Consideration of the complainant's interest and whether it was formally exploited will frequently determine whether a search and seizure occurred within the meaning of the Amendment and if the complainant's interests were lawfully violated.

What is protected by the Amendment?

There was no question in terms of common law. In Entick v. Carrington, Lord Camden remarked that persons joined society primarily to protect their property. This privilege is kept holy and untransferable in all circumstances when it hasn't been restricted or eliminated by a public law acting in the public interest.

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total quality management emphasizes a. a system where strong managers are the only decision makers b. the responsibility of the quality control staff to identify and solve all quality-related problems. c. a process where mostly statisticians get involved d. a commitment to quality that goes beyond internal company issues to suppliers and customers.

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Total quality management emphasizes commitment to quality that goes beyond internal company issues to suppliers and customers.

At the most essential degree of  management emphasizes , control is a subject that consists of a set of five well known capabilities: planning, organizing, staffing, leading and controlling. those 5 functions are a part of a body of practices and theories on how to be a a hit manager.

Control is the coordination and management of duties to attain a aim. Such administration sports include setting the corporation's approach and coordinating the efforts of personnel to perform these targets via the software of to be had assets.

Administrative management specializes in handling the full employer. Behavioral management attitude. Emphasizes man or woman attitudes and behaviors

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Answer:

A,B,D,E,F

Explanation:

i did the assignment :) srry if wrong

The W2 Tax form will show all of the following pieces of information EXCEPT which one?

Answers

The W2 Tax form will show all of the aforementioned pieces of information except: the number of hours you worked for the previous year.

The types of tax.

In Economics, there are different types of tax which are levied on individuals (employees) or business firms by the government, and these include the following:

Sales taxProperty taxFederal income tax

What is a W-2 Tax form?

A W-2 Tax form can be defined as an internal revenue service (IRS) tax form which is used to indicate the amount of money earned by an employee, including the correct federal income tax that should be withheld from an employee's paycheck in the United States of America.

Generally speaking, the W2 Tax form will show all of the following pieces of information:

An employee's income from the previous year.The amount of money that an employee paid in federal income tax during the previous year.The amount of state and local taxes that an employee paid during the previous year.

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zach opens a small tea shop. zach asks a few other small-business owners he knows for advice on dealing with employees and government regulation and improving processes at the shop. what does this scenario exemplify?

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Zach starts a modest tea store. Zach consults with a few other small business owners he knows for suggestions on how to handle staff, comply with laws, and enhance shop procedures. This instance is a good example of networking.

Sharing information or services between individuals, organizations, or groups is referred to as networking. Additionally, it provides a tool for people to expand their professional or commercial contacts. As a result, people can establish relationships or a network that is beneficial to them in their personal or professional lives.

In order to benefit both parties, networking involves connecting and engaging with others. Your network may be able to offer you guidance if your company is experiencing difficulties. Additionally, you will be able to impart your expertise to others, strengthening your bonds with them. Business networking is crucial because it helps professionals find new possibilities and raises their chances of becoming successful entrepreneurs.

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a distribution was made from a coverdell education savings account for $12,000 when the educational expenses were only $10,000. the amount distributed beyond the educational expenses will be

Answers

When the distribution exceeds education expenses, a portion representing earnings will be taxable to the beneficiary and may be subject to an additional 10% penalty tax.

What is penalty tax?

Whether you file your tax return on time or request an extension, the IRS requires you to pay the tax due by the filing deadline. The IRS assesses a failure to pay penalty if you don't make your required payments by that time. The maximum amount of this tax penalty, which is 0.5% of the tax you owe per month, is 25% of the tax payable.

What is the method used to determine the Failure to Pay Penalty?

For each month or portion of a month for which tax is outstanding, there is a failure to pay penalty of 0.5% of the unpaid taxes. No more than 25% of the taxpayer's overdue taxes can be penalized.

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a mutual fund has a net asset value (nav) of $7.80 per share, and the fund pays its underwriter a concession of $0.12 per share. if the fund has a sales load of $0.50 per share and an administrative fee of $0.15 per share, how much does the investor pay per share to purchase a class a share of this fund?

Answers

The correct answer was 8.3. The investor pays the public offering price (POP) when purchasing mutual fund shares. For a Class A share upon purchase, the POP is the NAV plus the sales charge.

What is public offering price (POP) ?

The price at which fresh issues of stock are made available to the public by an underwriter is known as the public offering price (POP). Underwriters must choose a public offering price that will appeal to investors because the primary objective of an initial public offering (IPO) is to raise capital. The soundness of the company's financial accounts, its level of profitability, prevailing trends in the marketplace, growth rates, and even investor confidence are all taken into account by underwriters when determining the public offering price.

The correct answer to the percent the investor pay per share to purchase a class a share of this fund was 8.3.

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a company acquires equipment by signing an interest-bearing note payable for $20,000. the interest rate is realistic so the company will record (select all that apply.) multiple select question. debit machine $20,000 debit machine for an amount less than $20,000 credit note payable $20,000 debit discount on note payable

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Key Learnings. Regardless of the results, full cost (FC) accounting enables businesses to capitalize all operating costs associated with discovering new oil and gas sources.

$20k from the machine, $20k on the credit note.

Which oil and gas accounting technique mandates that the cost of failed wells be incurred in the current period?

When it is determined that a failed exploratory well won't produce, the costs associated with that well are immediately expensed under the SE method. The expenditures are capitalized and then amortized using the FC accounting method throughout the anticipated life of the company's oil and gas reserves.

Which of the following expenses for research and development should be capitalized and written down over the next two years?

The response is a. Building for general research and development laboratories with future potential for other applications. Since the general laboratory facility for research and development will serve the company's needs beyond only that of research and development and will require depreciation over its useful life, it should be recognized as an asset.

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suppose jollyland has a population of 1,000 people and a gdp of $1 million, while follyland has a population of 8,000 people and a gdp of $8 million. which country has a higher gdp per capita?

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Assume that Jollyland has 1,000 residents and a $1 million GDP, while Follyland has 8,000 residents and an $8 million GDP. The GDP per person is the same in both nations.

How much is the GDP?

GDP is made up of products and services generated for market consumption as well as certain nonmarket production, including government-provided defense or educational services. Gross national product, or GNP, is a different concept that accounts for all national output.

We are aware that the total monetary worth of all final goods and services produced in an economy is known as the GDP. Let's imagine, for illustration, that Country B solely produces backrubs and bananas. Figure%: Services and Goods Made in Country B They produce five bananas in year one, each for one dollar, and five backrubs, each worth six dollars.

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in addition to the trade-off between current consumption and investment in capital and research, what other trade-offs do governments face in terms of economic growth?

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Natural environment trade -off the government faces in the terms of economic growth, in addition to the trade- off between current consumption and investment in capital and research.

What is the meaning of Trade-Off?

Economics is full of tradeoffs; Trade- off refers to forgoing a benefit or opportunity while making a choice. In economics trade off refers to opportunity cost which is the most preferred alternative. A trade off refers to the sacrifice made for getting a particular product or experience concept of trade- off is used to describe the everyday situations.

Many factors affect the trade- off environment of a particular country like availability of raw materials, skilled labor, machinery, technology, capital, market rate. Trade- off are positive in competition and essential for strategy . Trade- off are used in many business and real-life situations. Business is a game of trade- offs, Opportunity cost and trade off plays an important role in the business decisions.

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What tips do the directors of college counseling provide to help you successfully find scholarships?.

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Scholarship Application Suggestions

All application deadlines must be met. Make a schedule and stick to it using a calendar or planner.

What is scholarship?A scholarship is a type of financial aid given to students to help them further their education. Scholarships are typically awarded based on criteria such as academic merit, diversity and inclusion, athletic ability, and financial need.Merit-based scholarships, need-based scholarships, and athletic scholarships are the most common types of college scholarships.

Tips for scholarship:

Begin your search early. It's never too early to start looking for college scholarships.Consult with the school counselor.Inquire at your college or university.Take note of the deadlines.Look both online and in your neighborhood.Apply, apply, and apply again.Be wary of con artists.

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t is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. under the model group coordination of benefits provision, when t files a claim, his employers plan is considered the

Answers

Primary carrier in accordance with the Model Group Coordination of Benefits provision.

How are primary and secondary carriers different?

Secondary Component Carriers (SCC) are auxiliary carriers that can be activated or deactivated at any time to boost data rates, whereas the Primary Component Carrier (PCC) is the primary carrier and is only updated during the handover and cell selection.

What exactly is a second carrier?

A plan that, in accordance with the aforementioned "Order of Benefit Determination" provisions, has secondary responsibility for the provision of benefits and may reduce its benefit payments after the primary carrier's benefits are first determined.

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all about town is a chain of clothiers with locations in malls around the country. it maintains records on the average customer traffic at each location month by month, as well as sales at each facility, net profits for each, and so on. this type of record keeping is an example of a(n) system.

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All About Town is a clothing retailer with locations in shopping malls across the country. It keeps track of average customer traffic at each location month after month, as well as sales, net profits, and so on. This is an example of an information technology system.

What exactly does customer traffic imply?The number of customers who enter your store is referred to as foot traffic in retail. In general, increased foot traffic leads to increased revenue. Sensors at store entrances are commonly used in retail traffic counting systems to count the number of visitors. Infrared technology is used to track customers entering and exiting the store by counting each time a beam is broken. Foot traffic data, also known as footfall data, is the number of customers who pass through and visit specific locations such as retailers (retail stores) or shopping malls. The data shows the number of people in the area at specific times, the frequency of store visits, and the length of stay.

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g suppose that a country is in a steady state when a war destroys a third of the adult population and half of the capital stock, but nothing else is affected. what should we expect to happen? a) the country's steady-state level of output will rise, but the country's capital stock will rise to reach it. b) the country's output will jump above its steady-state and then capital stock will slowly fall. c) the country's steady-state level of output not change, neither will its current level of capital per worker. d) the country's output will fall below its steady-state and then capital stock, and hence output, will slowly rise

Answers

When a country is in steady state when a war destroys a third of the adult population, we should expect that the country's output will fall below its steady-state and then capital stock, and hence output, will slowly rise.

Option D is correct .

Solow model :

Solow model was developed by the economist Robert Solow, who won the Nobel prize and was the base of ultramodern proposition of profitable growth. It explains the timely change in affair position due to changes in population rate, saving and technological progress in an frugality or steady state . It's an exogenous model able of calculating the total productivity in the frugality. This states steady state level.

Steady state :

A system in which a process  is in a steady state if the variables( called state variables) which define the geste of the system or the process are unchanging in time. In nonstop time, this means that for those parcels p of the system, the partial outgrowth with respect to time is zero . This overall process is steady state .

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weiland, incorporated, has 490,000 shares outstanding that sell for $99 per share. the company plans a 4-for-1 stock split. how many shares will be outstanding after the split?

Answers

537500 shares will be outstanding after the split-up.

What is shares?
Shares are fractional ownership interests in a corporation. For some businesses, shares are a type of financial asset that allows for the equal distribution of the any declared residual profits in the form of dividends. A stock with no dividend payments does not distribute its profits to its shareholders. Instead, they look forward to increasing stock price growth as business profits rise. Shares are an organization's equity stock, and there are two main kinds of shares: common shares as well as preferred shares. As a result, the terms "shares" as well as "stock" are frequently used synonymously. Owners of a corporation have the option of issuing preferred shares or common stock to investors.

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a company needs to produce 400 units per day (the day is defined as 12 hours of production). there are three tasks to be completed, with a total task time for all three tasks of six minutes. the company should have:

Answers

The company should have 4 workstations.

What is task or process time?

Process lag time (PLT), often known as Little's Law, is the amount of time it takes an item to complete a process from the moment it enters until it exits. The processing time at each workstation is added to any waiting or queue time that may have occurred.

Total units to be produced in a day = 400

Time taken to produce 1 unit = 6 minutes

Total minutes in a day = 720

Break time spread in a day = 60

Net minutes in a day for production = 660

One unit/day = net minutes for production/ Total time taken to produce 1 unit

= 660/6 = 110

Therefore one workstation can produce 110 units in day

So to complete 400 units in a day, we need 3.6, i.e. 4 workstations

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dan picked up his friend rodney to drive to their softball game. both dan and rodney have a personal auto policy (pap) with $5,000 of medical payments coverage. dan hit a parked car, and rodney was injured, incurring $9,000 of medical expenses. how will this claim be settled under the other insurance provision of the pap?

Answers

Dan's insurance would pay nothing because the expense is not covered by a third-party accident claim. Dan's insurer would pay $0 and Rodney's insurer would pay the whole $3500.

What is insurance?
Insurance
is a form of financial protection in which, in exchange for a fee, one party undertakes to compensate another party in the case of a specific loss, damage, or injury. It is a type of risk management that is primarily used to mitigate the risk of a dependent or uncertain loss. An insurer, insurance business, insurance provider, or underwriter is a company that offers insurance. A policyholder is a person or entity who purchases insurance, whereas an insured is a person or entity who is covered by the policy. Policyholder and insured are frequently used interchangeably, although they are not synonymous, because coverage might occasionally extend to extra insureds who did not purchase the insurance.

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a cpa is preparing a presentation for a public accounting firm's workshop on internal control. the presentation includes discussion of the five components of internal control described in the aicpa's auditing standards. which section of the generally accepted auditing standards describes the first of the five components of internal control?

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If a cpa is a public accounting firm's internal control workshop, then AU-C 315.15 of the generally accepted auditing standards (GAAS) explains the first of the five components of internal control.

The Board is required under the Sarbanes-Oxley Act of 2002, as amended, to define by rule the auditing and related firm's professional practice standards that registered public accounting firms must adhere to when writing auditing standards reports for public companies, other issuers, and broker-dealers.

For financial statement audits for fiscal years ending on or after December 15, 2020, the following  the generally accepted auditing standards (GAAS) explains the first of the five components of internal control. is a list of firm's PCAOB auditing standards. The presentation covers a study of the five internal control components listed in the auditing standards of the aicpa.

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in the short run, a monopolist's economic profits multiple choice are always zero because consumers prefer to buy from competitive sellers. may be positive or negative depending on market demand and cost conditions. are always positive because the monopolist is a price-maker. are usually negative because of government price regulation.

Answers

Depending on the state of the market and the cost structure, a monopolist's economic earnings could be positive or negative in the short term.

Accounting earnings are significantly different from economic earnings, which are what stockholders actually make. In the beginning, GAAP accounting data was created for loan investors rather than equity investors. More than 30 modifications must be made to accounting results before economic earnings can be derived. These adjustments eliminate items that are disguised in the MD&A and footnotes of annual filings and plug gaps in GAAP accounting.

Economic earnings outperform accounting profits because, They are based on all of the financial data that is available. For all businesses, they are standardized. They give a truer picture of the underlying cash flows of the business. A corporation is not creating shareholder value if its economic earnings are negative.

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3 points print item 3 white company's assets total $780,000 and its owners' equity consists of capital stock of $500,000 and retained earnings of $150,000. determine the company's total amount of outstanding liabilities.

Answers

The company's total amount of outstanding liabilities is $130,000.

What are outstanding liabilities?

Outstanding liabilities are described as the amount of money that an individual or a business owes to investors, creditors, lenders, or any external individual. It is important to mention that liabilities in a business can be represented by the amount to be paid to creditors, loan repayment, payment of salaries and wages to employees, and debts.

Given that,

The assets of a company = $780,000

The owner's equity = capital stock + retained earnings = $500,000 + $150,000 = $650,000

The total amount of outstanding liabilities = 780,000 - 650,000 = $130,000

Hence, the $130,000 is the entire amount of liability.

It can be concluded that the company's total amount of outstanding liabilities is $130,000.

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suppose the price of milk increases by 15%, causing the quantity demanded of cereal to decrease by 45%. what would the cross-price elasticity for milk and cereal be in this case?

Answers

Based on the change in price for milk and the change in quantity demanded for cereal, the cross-price elasticity for milk and cereal can be found to be - 3

How to find the cross - price elasticity?

The cross-price elasticity for milk and cereal can be found by the formula:

= Change in the quantity demanded of cereal / Change in the price of milk

Solving for the cross - price elasticity gives:
Cross - price elasticity for milk and cereal = - 45% / 15%

= - 3

What this means is that the price of milk (cereal ) is inversely related to the quantity demanded for cereal (milk). For instance, if the price of milk increases, then the quantity demanded for cereal will decrease.

The reason for this is that both milk and cereals are compliments to each other and so will affect the other's quantity demand.

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