Suppose a City That Operates Local Electric and Natural Gas

question 97

Multiple Choice

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas. The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is

• A) inelastic.
• B) elastic.
• C) negative.
• D) equal to −1.

---

Definitions:

Credit

An accounting entry that increases liabilities and equity, or decreases an asset or expense account, representing the opposite of a debit.

Sales Discounts

Reductions from the listed or invoice price of goods or services provided to customers, often used as an incentive for early payment.

Accounts Receivable

Funds that customers owe a company for products supplied or services rendered but have not yet been paid for.

Invoice Price

The price listed on an invoice, representing the amount the buyer agrees to pay the seller for goods or services provided.