The high demand for electricity in South Africa has resulted in years of scheduled blackouts. Which of the following pricing scenarios is most likely to INCREASE the demand for electricity and make the blackouts worse?
A) Charging each household a rate based solely on the amount of electricity used.
B) Flat -fee pricing, where every household pays the same regardless of how much electricity is used.
C) Charging each household a rate based on the amount of electricity used and what time of day it is used.
D) Charging each household a different rate based on annual income and amount of electricity used.
E) Allotting a small amount of free electricity to each household to provide just enough electricity for the needs of the poorest households, with a premium price charged per kilowatt -hour used beyond the amount provided for free.

Question

Quizplus · Accepted Answer

Flat-fee pricing removes the financial incentive to conserve electricity, as households pay the same amount regardless of how much they use. This could lead to increased consumption and exacerbate the blackouts.

The High Demand for Electricity in South Africa Has Resulted