Can electric utility companies always raise their total revenue by raising their rates?
What will be an ideal response?
No. As electric companies continue to raise rates, customers move up along their demand curves for electricity, obeying the law of demand. As they do, they eventually enter an elastic portion of their demand curves, along which total revenue will decrease when rates increase further.
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A perfectly competitive firm's marginal revenue
A) may be either greater or less than price, depending on the quantity sold. B) is equal to price. C) is greater than price. D) is less than price because a firm must lower its price to sell more.
The marginal productivity theory of income states that a person's total income is determined by
A) how much the individual works. B) how profitable the firm the individual works for is. C) how much the individual has inherited. D) the amount and productivity of factors of production the individual owns.