Answer to Question #107099 in Economics of Enterprise for marcyline

Question

with regard to coal shortages and municipal debts, what forms of interventions do you think Eskom can put in place in order to cover up for all the debts and continue operating?incorporate relevant graphs.25 marks

Answer 1

Solution:

Eskom is a utility company in South Africa, established in 1923 as the Electricity Commission. Consequently, a given company can influence the market by regulating energy prices.

The following forms of intervention are possible.

1) The time limit for the supply of electricity to private consumers.

With a reduction in the time for supplying electricity to private consumers, the equilibrium price will not change, the equilibrium amount will change, that is, coal is saved by reducing consumption.

2) Influence on the structure of products by adjusting the range of products, the production of which uses energy-intensive technologies.

With constant demand, prices and equilibrium quantities increase.