Simply divide the percentage change in the quantity demand with the percentage change in price, giving you a positive value of 0.5. This shows that it is inelastic and the two goods are substitutes to each other.
Potential return has to do with the ability to receive a certain amount from an investment, while risk refers to the potential loss of the investment.
Answer:
$245,277
Explanation:
The dairy makes 454 pounds per day of which only 62 pounds is sold, thus the extra pounds of cheese per day are (454-62) = 392.
Now, the dairy operated 355 days a year, hence the annual cost of storage is,
(355 * 392) * $1.01 => $140,552.
Now the setup cost is $295 a day, so the annual would be,
(295 * 355) => $104,725.
Hence the minimum total annual costs will be = 140552+104725 = $245,277.
Hope I made myself clear.
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