Electricity accounts for almost20% of the production costs ofaluminum smelters.A 10% increase in the price ofelectricity leads the smelters toreduce their production, thuslowering their demand forelectricity by 5%. The adoption ofrecent technological innovationswould allow aluminum plants touse less electricity in the future.This suggests that the demandfor electricity by aluminumsmelters in the short term is(a) inelastic.(b) less elastic than their demandfor electricity in the long run.(c) Both of the above answers arecorrect.(d) None of the above answersare correct.

Electricity accounts for almost 20% of the production costs of aluminum smelters. A 10% increase in the price of electricity leads the smelters to reduce their production, thus lowering their demand for electricity by 5%. The adoption of

Electricity accounts for almost 20% of the production costs of aluminum smelters. A 10% increase in the price of electricity leads the smelters to reduce their production, thus lowering their demand for electricity by 5%. The adoption of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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