Suppose Milk and Cereal Are Compliments and the Demand for Milk

Multiple Choice

Suppose milk and cereal are compliments and the demand for milk is Q^d_m = 40 - 6P_m - 2P_c,where Q^d_m stands for millions of gallons of milk demanded,P_m stands for the price of milk and P_c stands for the price of cereal.The supply of milk is Q^s_m = 6P_m - 8,where Q^s_m stands for millions of gallons of milk supplied.The demand and supply of cereal are Q^d_c = 90 - 5P_c - P_m and Q^s_c = 5P_c - 10,respectively,where Q^d_c stands for millions of boxes of cereal demanded and Q^s_c stands for millions of boxes of cereal supplied.Suppose the government imposes a $2.00 per gallon tax on milk.In the new general equilibrium:

A) the price of milk and the price of cereal are both higher.
B) the price of milk is higher and the price of cereal is lower.
C) the price of milk is lower and the price of cereal is higher.
D) the price of milk and the price of cereal are both lower.