Question

US residents and domestic companies consume 6 billion megawatts of electricity each year. Aside from a few large companies that generate their own electricity, everybody else buys electricity from electric utility companies. These utilities have a variety of sources for the electricity that they generate -- coal, oil, natural gas, nuclear, and hydro plants. Which of these sources have the high fixed costs and which have low fixed costs? Why? What about variable costs? How do you think managers of electric utilities decide which energy source they should choose to power the large spinning turbines that create electricity?

Answer 1