Multiple choice

The National Electricity Grid Act, which comes into effect next May, will be good for state electricity boards because it will eliminate the electricity losses occurring due to existing problems in transfer of surplus electricity efficiently from one state to another. The act will also help streamline the tariff levied by National Grid Corporation on each of state electricity boards. Also as an incentive, government has announced a partial subsidy for the electricity being bought from National Grid by State Electricity Boards. This will lead to savings of 10 percent for each of the state electricity board. These savings can be passed along to customers, thereby promoting higher sales and profits.

Which of the following, if true, would most weaken the argument that the National Electricity Grid Act will be good for State Electricity Boards?

  1. Per capita consumption of electricity has steadily increased over the last two years and is expected to increase this year even without the National Electricity Grid Act.

  2. Many State Electricity boards will not pass on to consumers all of the savings from the incentive announced by Government.

  3. The National Electricity Grid Act includes an additional 20 percent tax on electricity sold to consumers.

  4. The consumption of electricity produced from domestic power plants in power-deficient states is expected to fall as a result of the National Electricity Grid Act.

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The author describes a positive effect that the National Electricity Grid Act will have on State Electricity Boards (by eliminating import duties, the State Electricity Boards can buy electricity more cheaply and then also sell it more cheaply which will increase sales and profits) and concludes that the act is an OVERALL benefit to State Electricity Boards. Choice (3) weakens the conclusion by providing a contrary NEGATIVE effect of the National Electricity Grid Act: raising prices through a 20 percent tax on sales. This suggests that the act will NOT be an overall benefit to State Electricity Boards, especially since the incentive provided to them is only expected to be 10 percent.

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