Suppose the Government of Nova Scotia Wants to Reduce the Consumption

Multiple Choice

Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent. The price elasticity of demand for electricity is 0.40. You advise the Nova Scotia government to

A) raise the price of electricity by 12.5 percent.
B) raise the price of electricity by 2 percent.
C) lower the price of electricity by 12.5 percent.
D) stay away from the market for electricity and let the market mechanism fix the problem.
E) lower the price of electricity by 2 percent.