Steel can be produced using three different methods: (1) a basic process using coke that produces steel ingots, (2) continuous casting, or (3) an electric furnace using steel scrap. The following table lists the average cost per ton of steel for each method.

a. Production of steel by electric furnace is a relatively new development (beginning in the late 1970s) and accounts for a growing fraction of total steel sold. What is your prediction about the future production share of this method? Explain.

b. If there were a new energy crisis (causing energy prices to triple), how would this affect steelmakers' choices of production methods?

c. Suppose the price of steel scrap is expected to fall significantly over the next five years. What effect would this have on the choice of production method?