Electric power utility companies use various fuel sources (e.g., coal, natural gas, nuclear) to generate electricity for their customers
What happens to the demand for natural gas used to generate electricity as we move from a short-run planning horizon to a long-run planning horizon? Why? A) Demand becomes more inelastic over time because the other fuel sources become more scarce, so there are fewer options available for electric power utilities in the long run.
B) Demand becomes more inelastic over time because all of the power generation plants tend to choose the same technology, which makes the industry less responsive to prices in the long run.
C) Demand becomes more elastic over time because the electric plant's technology becomes obsolete, and the power company has less flexibility to adjust to changes.
D) Demand becomes more elastic over time because the power companies have more options available and can adopt new generating technologies or substitutes for natural gas over the long run.
D
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To determine the equilibrium price level and equilibrium level of real GDP, the aggregate demand and aggregate supply must
A) be considered as a multiplier. B) be disregarded. C) be considered separately. D) intersect.
Which of the following is NOT likely to affect investment?
A) variations in expected output B) the nominal interest rate C) the real interest rate D) the tax treatment of depreciation allowances
The defining features of business cycles is that they
A. are inherently bad B. represent the underlying trend of real GDP C. are fluctuations about trend of real GDP D. measure prospects for future growth in the economy
When a commercial bank borrows from a Federal Reserve Bank
A. the supply of money automatically increases. B. it indicates that the commercial bank is unsound financially. C. the commercial bank's lending ability is increased. D. the commercial bank's reserves are reduced.