Electricity accounts for almost 20% of the cost of making steel. A 10% increase in electricity prices results in steel firms decreasing production and thereby demanding 5% less electricity
Over many years, technological innovations can change the way steel firms make steel and reduce the industry's energy requirements. This suggests that the steel industry's short-run elasticity of demand for electricity is probably A) less than one in absolute terms in the short run.
B) less than its long-run elasticity of demand for electricity.
C) Both A and B above.
D) Neither A nor B above.
C
You might also like to view...
The European Central Bank:
A) emphasizes maintaining interest rates below 5%. B) lays more emphasis on controlling employment than on controlling inflation. C) emphasizes maintaining unemployment rates below 5%. D) lays more emphasis on controlling inflation than on controlling employment.
Goods can be classified on the basis of whether their consumption is
A) includable and cooperative. B) rival and excludable. C) internal and excludable. D) rival and competitive.