Asked by Santiago alzate on Jul 26, 2024
Verified
A government wants to reduce electricity consumption by 10%. The price elasticity of demand for electricity is -0.1. The government must ________ the price of electricity by ________.
A) raise; 100.0%
B) raise; 10.0%
C) raise; 1.0%
D) lower; 20%
Price Elasticity
A gauge of the extent to which the demand for a certain item is affected by fluctuations in its cost.
Electricity Consumption
The total amount of electric power used by consumers within a specific period.
- Comprehend how government policies influence consumption patterns in relation to price elasticity.
Verified Answer
TB
Timothy BarkerAug 01, 2024
Final Answer :
A
Explanation :
The price elasticity of demand formula is percentage change in quantity demanded divided by percentage change in price. To achieve a 10% reduction in quantity demanded with a price elasticity of -0.1, the price must be raised by 100% (10% / -0.1 = -100%).
Learning Objectives
- Comprehend how government policies influence consumption patterns in relation to price elasticity.