According to the Regional Energy Commissioner, local authorities must 'urgently address the strategic necessity' of securing sustainable winter heating fuel. Regional residential heat demand is rising by approximately 3% per year, creating a projected need to expand heating capacity significantly. However, building large-scale biomass incinerators is ecologically controversial and heavily resisted by residents, while the commercial viability of utilizing agricultural straw pellets as a substitute fuel has been severely limited by a lack of demand for this biomass byproduct.
It can be inferred from the passage that
the opportunity cost of building large-scale biomass incinerators is always utilizing agricultural straw pellets.
increasing the supply of agricultural straw pellets would reduce the annual 3%3\%3% growth rate of residential heat demand.
the equilibrium price of agricultural straw pellets is low.
the private cost of fossil-fuel heating is greater than its social cost.
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.