I recently had the electric company install a device to turn off my air conditioner for brief periods during time of excessive heat. They pay me $8 a month for permission to do that. Why would a firm pay me to demand less of their product?
What will be an ideal response?
During the hottest days they need to generate much more electricity than most of the time during the year. It would be costly to buy the capital equipment needed for those times if it would be idle the rest of the year. By convincing some to not use as much in those high demand days they can have lower capital costs and some of the savings they us to convince customers to use less. This is the peak load pricing issue worked at by shifting my peak demand for electricity to the left.
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In the above figure, who pays the larger share of the tax?
A) buyers B) sellers C) Buyers and sellers each pay the same amount of the tax and each pays $10 per compact disc. D) Buyers and sellers each pay the same amount of the tax, but the amount each pays is different than $10 per compact disc.
There are circumstances under which the corporation tax is equivalent to an economic profits tax.
A. True B. False C. Uncertain
The relationship between changes in income and purchase of a good indicates
a. whether the good is a luxury or necessity. b. whether the good is normal or inferior. c. whether the good is a complement or substitute. d. Both a and b.
What causes the aggregate supply curve to have an upward slope in the short run, but a vertical slope in the long run?