The electric power company in a city increased its prices by 15% this year. since the demand for electricity is inelastic demand in the short run, the equilibrium price will greatly increase. Thus the correct option is C.
When the willingness of an individual to buy any product is increased it gives rise to demand. This willingness will shift with a change in the price or quality.
In this case, it is given that the electricity provider in a city raised its rates by 15%. The price will significantly rise due to increased demand because the demand for electricity is inelastic in the short term.
Therefore, option C is appropriate.
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The complete question is Propbably
The electric power company in a city increased its prices by 15% this year. Since the demand for electricity is a bad ________ demand in the short run, the equilibrium price will ________.
Select one:
a. inelastic; increase
b. inelastic; decrease
c. inelastic; greatly increase
d. elastic; decrease
