Problem
Waterson Power Corporation's regulator has just allowed a rate increase from 9 to 11 cents per kilowatt hour of electricity. The short-run demand elasticity is -0.6 and the long-run demand elasticity is -1.2.
(a) What will be the percentage reduction in power demanded in the short run?
(b) What will be the percentage reduction in power demanded in the long run?
(c) Will revenues increase or decrease in the short and long runs?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.