Answer to Question #116970 in Macroeconomics for Muhammad

Question

A market for electricity is in equilibrium in bangladesh at a point where both supply and demand curves intersect each other. If the following events ( price factors or non price factor of demand or supply) take place into the market of electricity then how it will effect equilibrium point, equilibrium price and equilibrium quantity of electricity in bangaldesh. Use graphical representation for each case seperately to answer your question. Label and interpret each daigram

1.when the overall prices of the factors of electricity increase

Answer 1

In the diagram, demand is shown in blue, the initial level of supply in red, and after increasing prices for factors involved in electricity production, in green.

Rising prices for factors involved in the production of electricity will lead to higher prices for electricity and, as a result, to a decrease in the supply.