Answer: Price of cereals must fall by 12%
Step-by-step explanation:
A 10% rise in the price of milk will lead to a fall in quantity demanded by =-0.9 * 10= 9%.
To prevent the demand for cereals from falling by 9%, the price of cereals must fall by




Thus, to offset the effect of a 10% rise in price of milk, the price of cereals must fall by 12%.