Suppose RioTintoAlcan Is Considering the Construction of a New Aluminum

question 22

Multiple Choice

Suppose RioTintoAlcan is considering the construction of a new aluminum smelter in Northern Quebec,the operation of which requires a great deal of electricity.Suppose also that the price of electricity is predicted to rise significantly in the near future.As a result,the firm decides to build a plant using existing technology that is more expensive but uses less electricity per tonne of aluminum produced.This behaviour is an example of

• A)short- run cost minimization.
• B)innovation away from changes in factor prices.
• C)the long- run principle of substitution.
• D)long- run economies of scale.
• E)short- run profit maximization.

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