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.govt. of bangladesh is unable to protect investor's life in pandemic COVID-19

Answer 1

The initial equilibrium of the electricity market is marked on the graph as a point E₀, where P₀ is an equilibrium price and Q₀ is an equilibrium quantity. The inability of the government of Bangladesh to protect investor’s life in pandemic COVID-19 the decrease of investments inside the country. Consequently, investments in electricity production also declines and its supply drops, while demand stays the same. Its non-price factor and the supply curve shifts to the left (from S₀ to S₁). Point E₁ determines a new equilibrium on the particular market (where new supply curve S₁ intersects demand curve D). As a result, new equilibrium quantity reduces and moves from Q₀ to Q₁. On the contrary, equilibrium price rises from P₀ to P₁.