Q1. Edison Electric Company's president has been arguing that residential electric rates need to be raised relative to industrial rates. His reason is that the rate of return that the company earns on its assets is higher from its industrial customers than from its residential customers. Is this a good reason? Explain how can Edison determine its assets dedicated to the two classes of customers?
Q2. Real GDP was $4719 billion in year 1 and $4848 billion in year 2. In contrast, real GDP per capita in year 1 was $19261, but in year 2 it was only 19162. Why did one measure increase while the other measure decreased?