Will revenues increase or decrease in the short and long run

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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?

Reference no: EM131072992

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