14) The government wants to reduce the consumption of electricity by 5%. The price elasticity of demand for electricity is -0.4. The government should A) lower the price of electricity by 0.4%.B) raise the price of electricity by .08%.C) raise the price of electricity by 12.5%.D) raise the price of electricity by 2%.

Given, Consumption of electricity = -5% Price elasticity of demand for electricity = -0.4

Answered: 14) The government wants to reduce the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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14) The government wants to reduce the consumption of electricity by 5%. The price elasticity of demand for electricity is -0.4. The government should

A) lower the price of electricity by 0.4%.
B) raise the price of electricity by .08%.
C) raise the price of electricity by 12.5%.
D) raise the price of electricity by 2%.

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