If the government reduces electricity subsidy, what will be the effect on an energy-intensive industry?

Correct answer: Energy cost may increase

The direct answer is A: energy cost may increase. A subsidy is financial support from the government that lowers the amount a business has to pay. If electricity subsidy is reduced, the government pays less support, so the industry may have to pay a larger share of its electricity bill. For an energy-intensive industry, electricity is a major input; therefore production cost may rise, and profit or prices may be affected. A is correct because it states the immediate likely cost effect, while “may” allows for other pricing arrangements. B is unrelated: government electricity policy does not reduce a customer’s age. C is false and unrelated: reducing a subsidy cannot make machines free. D concerns weather and has no logical connection with electricity subsidy. Do not confuse subsidy reduction with electricity becoming free; the direction is generally higher business cost. Memory cue: subsidy down means the company’s payment burden may go up.