An increase in the price of electricity, ceteris paribus, indicates that
A) the purchasing power of money is decreasing.
B) the purchasing power of money is increasing.
C) electricity is relatively more scarce than it was before.
D) inflation is increasing.

Question

Quizplus · Accepted Answer

An increase in the price of electricity, ceteris paribus (all other factors remaining constant), indicates that electricity is relatively more scarce than it was before. As the demand for electricity increases or the supply of electricity decreases, the price will go up.

An Increase in the Price of Electricity, Ceteris Paribus, Indicates