When considering demand and supply while pertaining to the increase in price and quantity from the months of June 2002 to august 2002 one must first consider the idea that supply in inelastic. Despite the obvious large increase in price the quantity supplied does not change in such a drastic manner. It is easy to conceive the idea that much more electricity would be demanded in the summer months due to the constant use of air conditioners, fans etc. In this case in particular the price increase is around 90% and the increase in quantity supplied is mere 6%. This substantial shift in the demand curve is therefore cau

= 34%

The price freeze instilled for low volume buyers allows consumers not only to purchase electricity at a cheaper rate but also causes consumers to use electricity more often. When prices are high, consumers will generally tend to use less power by turning off unnecessary lights and/or appliances. When the price freeze was put into place low volume consumers began to demand more electricity. Due to the increased demand of low volume buyers, high volume buyers supply curve in turn will shift to the left decreasing their market share supply and increasing there price.

- 0.044 * average quantity demanded of electricity per month

Some topics in this essay:
MW/H Run, , Unfortunately September, Short Run, price freeze, quantity supplied, 43 cents kwh, 43 cents, short run, low volume, volume buyers, cents kwh, electricity market, quantity demanded electricity, average quantity, * average, * average quantity, increase quantity supplied, low volume buyers,