Answer to Question #204055 in Microeconomics for Phumudzo

Question

Why should electricity generation plants (Eskom) keep more stock rather than less stock?

Answer 1

Electricity producing plants are typically designed to be the most cost-effective, rather than the most efficient. As a result, the plant produces maximum production at specific times, lowering the cost of energy produced to a minimum. This is because the plant's efficiency is one of the most important factors in determining the energy cost.