Question:
If an utility company were considering an increase in electricity or gas prices in order to cover the costs of a capital investment, this sector would result in the smallest change in quantity demanded in the long run and thus higher profits. True or false?
Answer:
The answer is True.
Explanation:
Change in the demand for gasoline and or electricity is primarily set by the number of industrial or bulk users.
Scarce goods are allocated though the help of prices. It is important to note that demand for gasoline or electricity is <u>more elastic in the long term</u>, so small changes in price will alter supply and demand in either direction in the shortrun.
The demand for gas or electricity are by nature <em><u>inelastic.</u></em> This means that when prices go up, demand goes down <em><u>but not by much.</u></em>
It means that in the short term, the individuals cannot alter their lifestyle immediately to adjust for the hike in prices.
To adjust they would have to probably purchase new devices which or cars which consume less gas or electricity.
The effect this has for the company on the overall is that they are able to achieve their aim of recouping their capital investments from the planned increase in price.
Cheers!
Answer:
A. Money Market checking account
Explanation:
A money market account represents a savings account with some features of a checking account provided by a bank. Herein, a customer deposits money, and such funds are invested into money market instruments which are highly liquid, such as commercial papers, treasury bills, certificate of deposits, etc.
Such accounts provide debit card and checks and allow a certain number of withdrawals every month. The rate of interest offered under these accounts is usually higher than the ordinary savings account.
In the given case, the customer has $20,000 to invest and also requires immediate access to the funds to pay his bills. The best recommendation would be to deposit such funds to a money market checking account, which would provide him with access i.e liquidity, a higher rate of interest than on savings account and safety of investment.
It is noteworthy that all other options specified are not as liquid as money market checking account since, those alternatives either require considerable time in redeeming and selling or do not provide immediate access to funds.
A savings account you can redraw from, while a certificate of deposite has to be left alone for a certain while, and it ussually gains more interest.
Answer:
0.079
Explanation:
Price elasticity of demand using midpoint formula can be calculated as follows
Formula
Elasticity of demand = (change in quantity/average quantity)/(change in price/average price)
Calculation
Elasticity of demand = (600/10,900)/(-2.1/3.05)
Elasticity of demand =-0.055 / -0.688
Elasticity of demand =-0.079
working
Change in price (2-4.1) = -2.1
Average price (2+4.1)/2=3.05
Change in quantity (11,200-10600) = 600
average quantity (11,200+10,600)/2 = 10,900
The elasticity of demand is inelastic as the elasticity is below 1.