In Canada provincial regulatory boards set tiered prices for electricity.These tiered prices lead to budget lines that are
A) Upward-sloping
B) Kinked
C) Horizontal at a specific level of electricity consumption
D) Vertical at a specific level of electricity consumption

Question

Quizplus · Accepted Answer

Tiered pricing results in a kinked budget line because the price changes abruptly once a certain consumption threshold is reached. Below the threshold, the price is relatively low and above the threshold, the price is relatively high. This creates a kink in the budget line at the consumption level where the price changes.

In Canada Provincial Regulatory Boards Set Tiered Prices for Electricity