Question

Mansour: We should both plan to change some of our investments from coal companies to less polluting energy companies. And here’s why. Consumers are increasingly demanding nonpolluting energy, and energy companies are increasingly supplying it.

Answer 1

Answer:

Find below the concluding part of the question:

Therese: I'm not sure we should do what you suggest. As demand for nonpolluting energy increases relative to supply, its price will increase, and then the more polluting energy will cost relatively less. Demand for the cheaper, dirtier energy forms will then increase, as will the stock values of the companies that produce them.

Therese responds to Mansour's proposal by doing which of the following?

A. Advocating that consumers use less expensive forms of energy

B. Implying that not all uses of coal for energy are necessarily polluting

C. Disagreeing with Mansour's claim that consumers are increasingly demanding nonpolluting energy

D. Suggesting that leaving their existing energy investments unchanged could be the better course

E. Providing a reason to doubt Mansour's assumption that supply of nonpolluting energy will increase in line with demand

The correct option is D, Suggesting that leaving their existing energy investments unchanged could be the better course

Explanation:

The overriding point in Therese's response is that the priority for investing is to receive higher returns on investment, hence the honorable thing to do would be to leave the investment unaltered because the increase demand for non-polluting source of energy would lead increase in their prices.

At that point of price increase, people would settle for lower cost dirtier sources of energy that would drive up the value of such companies producing dirtier form of energy which in turns increase their share prices as well as Mansour and Therese's investment