Consider an Electric Utility That May Use Either Coal or Natural

question 35

Multiple Choice

Consider an electric utility that may use either coal or natural gas to generate electricity. Under which of the following conditions would it be most valuable to have co-firing equipment? Let a c be the annual standard deviation of coal prices, and let a n be the annual standard deviation of natural gas prices, and p the correlation between coal prices and natural gas prices.

• A) a c high, a n high, p low.
• B) a c high, a n low, p low.
• C) a c low, a n high, p low.
• D) a c low, a n low, p high.

---

Definitions:

Interests

Refers to the preferences or desires individuals or groups have, which often guide their actions and decisions.

Positions

The locations or roles assigned to individuals or things in relation to others within a structure, system, or context.

BATNA

Best Alternative To a Negotiated Agreement; the best course of action that a party can take if negotiations fail and an agreement cannot be reached.

Negative Assessment

A critical evaluation or judgment that implies a lack of success, quality, or desirability.