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3 years ago

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

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There are many positive effects to globalization, but which of the following would be a negative effect?

olga2289 [7]

Answer:

Cultural intermingling

Explanation:

globalization bring about cultural intermingling which can be a negative effect when it leads to abandonment of culture. because globalization mixed different cultures. then people reconsidered their rules and customs regarding their culture as primitive, thereby adopting the western culture and abandoning their own.

4 0

3 years ago

Because a decrease in real autonomous spending results in a ________ in the price level, the ultimate effect on real gdp is ____

KIM [24]

Because a decrease in real autonomous spending results in a fall in the price level, the ultimate effect on real GDP is smaller that predicted by the multiplier.

Another significant discovery is made by Keynesian economics. You've learnt that Keynesians think fluctuations in total spending are what ultimately determine the level of economic activity in the short run (or aggregate demand).

Assume that full employment prevails in an economy because the macro equilibrium occurs at the potential GDP.

Keynes noted that even while the economy starts at potential GDP, it is improbable that it will stay there because aggregate demand has a propensity to fluctuate.

In 2007, the collapse of the housing market caused a decline in U.S. investment spending. The Great Recession subsequently hit the American economy as a result.

To learn more about Keynesian here

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7 0

2 years ago

You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation

ladessa [460]

Answer:

14.48%

Explanation:

The ARR is the quotient between the average income of a project over his investment cost.

The income will consider depreication and taxes.

We are given with the net income so, we should assueme are already included.

Frist step, calculate average net income.

$ 1,864,300,

+ $ 1,917 ,600

+ $ 1,886,000

+ $ 1,339,500

$ 7,007,400 Total return

Now we divide by 4 because there is a total of 4 years

$ 7,007,400 / 4 = $ 1,751,850 Average income

Now we calculate the ARR

average net income/ investment

1,751,850 / 12,100,000 = 0.144780992 = 14.48%

4 0

3 years ago

Norbert works in a beauty salon. he receives a 50% employee discount for salon services. in 2016, he used his discount to buy $1

Crank

The answer is D. $600. In general, the employee discount didn't result in taxable income to the recipient. The amount that may be excluded in relation to services purchased by employees, however, is limited to 20% of the amount normally charged to non-employee customers. As a result, Norbert would be able to exclude an employee discount up to 20% x $2,000 or $400 with the remaining $600 included in gross income.

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3 years ago

Suppose that, in an attempt to combat severe unemployment, the government decides to increase the amount of money in circulation

ELEN [110]

Answer:

increases

higher

lower

Explanation:

If the money supply is increased. individuals would have more money and consumption would increase. Increase in consumption would lead to a rise in demand.

when demand exceeds supply, prices rise,

When there is a rise in price, it encourages producers to increase production in order to increase their profit margin.

In order to expand production, more factors of production would be needed. So, more labour would be hired. thus, unemployment would fall.

it can be seen that higher inflation lowers unemployment

5 0

3 years ago