Suppose that, in an attempt to entice citizens to conserve energy, the government enacted regulations requiring that all air conditioners be more efficient in their use of electricity. After this regulation was implemented, government officials were then surprised to discover that people used even more electricity than before. Using the concept of price elasticity, which of the following statements best explains how this increase might have occurred?multiple choiceBecause the regulation effectively reduced the price of cool air, consumers with sufficiently elastic demand might have bought substantially more of it.There is no way the observed change could have occurred if all consumers were fully informed, self-interested, and rational.The government ignored the possibility that the demand curve for electricity might be upward sloping.In practice, people often pay little attention to the relevant costs and benefits when deciding how much of a good, like electricity, to use.

Price Elasticity:Price elasticity refers to the responsiveness of the quantity demanded of a good or…

Answered: Suppose that, in an attempt to entice…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Suppose that, in an attempt to entice citizens to conserve energy, the government enacted regulations requiring that all air conditioners be more efficient in their use of electricity. After this regulation was implemented, government officials were then surprised to discover that people used even more electricity than before.

Using the concept of price elasticity, which of the following statements best explains how this increase might have occurred?

multiple choice

Because the regulation effectively reduced the price of cool air, consumers with sufficiently elastic demand might have bought substantially more of it.
There is no way the observed change could have occurred if all consumers were fully informed, self-interested, and rational.
The government ignored the possibility that the demand curve for electricity might be upward sloping.
In practice, people often pay little attention to the relevant costs and benefits when deciding how much of a good, like electricity, to use.

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