Suppose RioTintoAlcan Is Considering the Construction of a New Aluminum

question 37

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