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An increase in the price of electricity, ceteris paribus, indicates that___________. a. the purchasing power of money is increasing. b. the purchasing power of money is decreasing.c. inflation is increasing.d. electricity is relatively more scarce than it was before.

User AlexKost
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Answer:

electricity is relatively more scarce than it was before.

Step-by-step explanation:

There are two major causes for an increases in price or an inflation for any product or services and they are: Demand-Pull and Cost-Push. When demand for a particular product becomes two high and the supply cannot match the demand, price increases. Furthermore, price will increase if the supply cost increases and thus price increases. From this two causes, the case of electricity from the example, the price increase of electricity may either be as a result of over-demand and hence limiting supply and causing scarcity, or as an increase in the cost of producing electricity. Hence from this two reasons, Option D (electricity is relatively more scarce than it was before) agrees with our first reason and hence is the answer. Relatively in the option means it may be caused by a factor (increase in demand).

User Zoleas
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