A Government Wants to Reduce Electricity Consumption by 10

question 147

Multiple Choice

A government wants to reduce electricity consumption by 10%. The price elasticity of demand for electricity is -0.1. The government must ________ the price of electricity by ________.

• A) raise; 100.0%
• B) raise; 10.0%
• C) raise; 1.0%
• D) lower; 20%

---

Definitions:

Residual Income

The amount of income generated after all expenses and costs have been deducted from total revenues, often used in performance evaluation.

Minimum Required Rate

The lowest acceptable return on investment or performance measure that a company or investor expects to achieve.

Operating Assets

Resources owned by a business that are used in its day-to-day operations to generate income.

Residual Income

Income that remains after subtracting all the cost of capital from the net operating profit.