Wilson's Heating and Air Conditioning Company specializes in electric heat pumps. The owner should keep track of the price of natural gas, knowing that
A)natural gas creates more environmental greenhouse effects than coal.
B)an increase in the price of natural gas will increase demand for his electrical heating systems.
C)gas heating systems and electrical heating systems are complementary goods.
D)when the price of natural gas goes up, the quantity demanded also rises.
E)the demand for natural gas is price elastic.

Question

Quizplus · Accepted Answer

Wilson's Heating and Air Conditioning Company specializing in electric heat pumps will benefit from an increase in the price of natural gas as it will increase the demand for his electrical heating systems. This is because when the price of natural gas is high, consumers tend to switch to more cost-effective alternatives such as electric heat pumps, which will lead to an increase in demand for the company's products.

Wilson's Heating and Air Conditioning Company Specializes in Electric Heat