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.

---

Definitions:

Profitability

The degree to which a business or activity yields profit or financial gain.

Oligopolists

Firms within a market structure characterized by a small number of large firms controlling the market, often leading to limited competition.

R&D

Stands for Research and Development; it involves activities undertaken by businesses and organizations to innovate and introduce new products or services.

Marketing and Advertising

The activities involved in promoting and selling products or services, including market research and advertising campaigns.