1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ANEK [815]
3 years ago
6

In the short run, the price elasticity of the demand and supply of electricity can be very low.

Business
1 answer:
tatiyna3 years ago
5 0

Answer:

A. Revenue for the industry would increase

B. Short term incentive to shut down a power plant

Explanation:

The price elasticity of demand is a concept that determines the variability of the demand of a product or service relative to changes in its price. We know that the demand curve is a downward sloping curve so any changes in price will result in a lower level of demand. Exactly how much the demand will reduce in percentage terms relative to a percentage increase in price is calculated using the price elasticity of demand. If a demand is inelastic (i.e the price elasticity is low) for any percentage increase in price will lead a less than proportionate increase in demand. So for example, a 10% increase in price will lead to a less than 10% decrease in demand.

In our question, the first part indicates that a power plant has been shut down which decreases the supply. This is indicated by an inward shift of the supply curve to the left. This inward shift would cause the price to increase. However, since the price elasticity of demand is very low in the short run, the demand will increase by a LOWER percentage. Therefore overall revenues of the industry would increase. To show this as an example, lets assume that the price was $1 for which demand was 100 units. Existing revenue is therefore $100. Due to the shift in supply, prices increase upward by 10%. The new price would be $1.1. However since the demand is inelastic, the demand would reduce by less than 10% (lets assume by 5%). The new demand would then be 95 units. The new revenue would be $104.5. Therefore, we can see that industry revenue would increase.

The answer to option B is similar to above. The caveat is that since one company has many power plants, it controls a significant portion of total industry supply, making it a monopoly. In this scenario, its fair to assume that if the company reduces its supply, there is a negligible risk of a competitor firm increasing its supply to capture the market. So the company would have a short term incentive to shut down a plant every now and then to capitalize on the the higher revenue generated from the associated increase in price. Furthermore, shutting down a plant would save up on costs which would allow profits to increase even more in the short run

You might be interested in
If mistakes or fraudulent reporting behavior are discovered, auditors require the company to correct all significant information
stepladder [879]

Answer:

The correct answer is True.

Explanation:

In the context of the audit of financial statements, fraud consists of recording intentional errors in the financial statements. The two main fraud categories are: fraudulent financial reports and asset misappropriation.

Fraudulent financial reports are characterized by containing errors or intentional omissions in the amounts with the intention of deceiving users. Most cases of fraudulent financial reports overestimate assets and income or omit financial liabilities and expenses to show higher income.

6 0
3 years ago
Specific identification is ______. Multiple choice question. a high-tech security technique for identifying key employees a deta
ELEN [110]

Specific Identification is the accounting record of the transactions of the proposal, that is, an inventory method that tracks which item is actually sold and debits.

<h3>What is specific identification?</h3>

It is an accounting record between income and expenses, used to keep track of identifiable and cost-specific inventory items.

This method gives managers or members of an entity a greater possibility of manipulating profits by identifying units in ending inventory as coming from specific purchases.

Therefore, we can conclude that the specific identification method is to track the cost of each item or category of products in the inventory.

Learn more about specific identification here: brainly.com/question/25056275

6 0
2 years ago
​India's Current Account. Use the following balance of payments data for India from the​ IMF: LOADING.... What is​ India's balan
s344n2d4d5 [400]

Answer:

  • 2004 ⇒ $2,640 million
  • 2009 ⇒ $12,540 million
  • 2014  ⇒  $18,655 million

Explanation:

2004 balance on services

= Services Credit, (exports) - Services Debit, (imports)

= 38,281 - 35,641

= $2,640 million

2009

= 92,889 - 80,349

= $12,540 million

2014

= 156,252 - 137,597

= $18,655 million

3 0
3 years ago
Which of the following statements is FALSE? A venture capital firm is a limited partnership that specializes in raising money to
pantera1 [17]

Answer:

Venture capitalists typically control all of the seats on a start-up's board of directors, and often represents the single largest voting block on the board.

Explanation:

A venture capital is a type of capital arrangement by venture capital , provided to start up companies with the prospect of potential growth. Companies that provides financies for start up have a stake in the business they are financing. It is usually a high risk business.

Examples of venture capitalist are

Investment banks, pension funds, insurance companies etc.

Before finances can be made by venture capitalist, the initial capital required to start required to start the business is usually provided by the entrepreneur and his family.

5 0
2 years ago
A school at which you are likely to be accepted because you meet graduation requirements is called a:
RideAnS [48]
B. Probable college would be the best answer choice
6 0
2 years ago
Other questions:
  • The service division of Raney Industries reported the following results for 2017.
    6·1 answer
  • A price weighted index is composed of 3 stocks. Stocks A, B, and C are trading for $100, $56 and $32 respectively. The number of
    13·1 answer
  • A labor contract provides for a first-year wage of $15 per hour, and specifies that the real wage will rise by 2 percent in the
    10·1 answer
  • Suppose that a Treasury coupon security is purchased on April 8 and that the last coupon payment was on February 15. Assume that
    10·1 answer
  • Researching investments online can be valuable because
    6·1 answer
  • Walkane Juices is planning to launch a line of flavored beverages. It encourages consumers to take a $1,000,000 Taste Challenge.
    15·1 answer
  • Gonzalez Company has been in business for several years. At the end of the current year, the ledger shows:
    15·1 answer
  • The leading and the lagging strands differ in that _____.
    6·1 answer
  • D'Unique Enterprise, a company that manufactures hair growth oil is preparing for its upcoming financial year (2021). D’Unique'
    5·1 answer
  • What is the difference between direct e-mailing and spam ?
    9·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!