Electricity Demand and Supply Pakistan Essay

electricity buck-shedding in Pakistan is one of the biggest domestic problems faced by the plain. Along with the problems that the cater shortage brings for the society as a whole and for the inhabitants of the society the fountain failures seriously curbs the economic potential of the rescue.Considering most of the medium and large outgo industries of Pakistan depend on machinery that is impart by electricity they ar solemn dependent on the electricity add up, with the electricity supply cut their achievement capacity precipitates dramatic tout ensembley as well. Since most of Pakistani manufacturing industries lack the egotism generation ability hence this power outage is even more deadly to their business. So eventually what ends up happening is that along with creating general inconvenience among the public this power shortage reduces the performance capacity of the firms and hence reduces the mix supply.Aggregate supply can be defined as the kernel supply of goods and services that firms in a national economy plan on selling during a specific judgment of conviction period. It is the total criterion of goods and services that firms are ordaininging to sell at a inclined price direct in an economy. It is the total amount of goods and services that firms are forgeting to sell at a given price level in an economy. In the long run, the core-supply curve is assumed to be steep In the short run, the meat-supply curve is assumed to be upward lean SRAS (Short run gist admit) shows total planned output when prices in the economy can change but the prices and productivity of all factor inputs e.g. occupy rates and the state of technology are assumed to be held constant. LRAS (Long run aggregate supply) shows total planned output when both prices and average pursue rates can change it is a measure of a countrys potential output and the concept is linked strongly to that of the production possibility frontier The SRAS and LRAS can b e graphically represented as fol upsetsSRASLRASNow what happens is that firms will have to cut down their production ferment in order to effectively meet the cost incurred or it will come to a position of losses. The cutting down of the production outgrowth meansdecreasing the supply of the firm. As a firm produces lesser than it did before, less workers will be needed because the excess labor has been make redundant since fewer employees are now needed to produce lesser output. Moreover, the firm can no longer afford to employ as many workers as it did before. Hence this will eventually give bestride to over the course of time as many workers have will have to be laid off in industries due to low activity. This will constantly decrease the total employment of the population because as the unemployment appends the buying power of the peck in addition falls.They are now earning fewer wages and the income effect will lead to a drastic decrease in the consumption. Consumption i s one of the major contributors in the aggregate hire function. We define aggregate demand as the total demand for all goods and services produced in the economy at a given time and price level. It is the amount of goods and services in the economy that will be produced at all possible price levels. The aggregate demand is ordinarily described as a linear sum of four divisible demand sources.3WhereC = ConsumptionI = InvestmentG = political relation Spending(X-M) = Net Exports Net ImportsThe graph for AD is as followsIt is oftentimes cited that the aggregate demand curve is downward sloping because at trim back price levels a greater quantity is demanded. While this is correct at the microeconomic, single good level, at the aggregate level this is incorrect. The aggregate demand curve is in fact downward sloping as a extend of the Pigous wealth effect. Pigou effect is an economics term that refers to the rousing of output and employment caused by change magnitude consumptio n due to a rise in real balances of wealth, particularly during deflation. Keynes said that a expend in aggregate demand could lower employment and the price level (deflationary depression).Hence it can besaid that any decrease in the consumption would bring about a fall in the aggregate demand. Consumer demand or consumption, that is also known as personal consumption expenditure, is the largest part of aggregate demand or effective demand at the macroeconomic level. The interaction of the aggregate demand and aggregate supply gives us the market symmetry. Now as has been previously pointed out, frequent power cuts will mean a cutting down of the production process which invariably brings about a decrease in the aggregate supply. What happens is that as aggregate supply decreases with the aggregate demand being constant (as obviously mickle would still be demanding the same quantity of products) pompousness will increase as shown on a lower floorNow here we can discern with AS moving to a new point as it decreases it is actually increasing the price level which results in largeness and as a result unemployment increases as well, because when there is pretension in the economy there is a rise in prices hence there is a fall in the demand of goods and services and the producers reduce their production level and as a result they end up decreasing the number of workers which means unemployment increases. Unemployment on the macroeconomic level is a sign that the economy is operating below its full production capacity, this is a sign of inefficiency. Here we can see that splashiness is playing a key role in find out the employment level. Hence well have a look at how load shedding gives rise to inflation. Inflation is conventionally defined as a general increase in the level of prices in goods and services.One of the cause of inflation is a decrease in the value of money. During the course of inflation income and prices do not increase at the same rate t he purchasing power of the nation as a whole drops. One of the reasons of inflation is surplus amount of money which causes the prices to rise at an extremely luxuriously rate. Other than that, an otherwise reason for inflation is the rise in the costs of production which in twist around increases the prices of the products. Moreover inflation occurs when aggregate supply exceeds aggregate demand hence increasing the price level. In the background of load shedding though, we see that it has been a triggering stimulus for initiating inflation. The CPI inflation averaged 23.5 percent in July-February 2008-09 in Pakistan as against 8.9 percent in the comparable period of last year.The deficiency of button sources is causing stir on the demand side of the economic picture causing an increase in the demand for energy sources as it has a huge effect on all spheres of economy of a nation having a primary trance on industry level. The insufficiency of the available energy sources is c ausing the people to demand more electricity to meet their needs on the idiosyncratic as well as industry level which in turn when observed in the context of graphical standard shows a sacque of the demand curve to the right causing a shift of the equilibrium position increasing the price level. (Demand-Pull Inflation) The increase in level of inflation has also been caused due to an increase in the cost of energy sources. The scarceness of the energy resources available to the industries is making them shift to other sources for the purpose of energy generation which in turn has caused their costs to sky rocket.Now, due to the heavy burden that e genuinelyone has to face in this state of affairs is causing a shift of the AS curve in terms of graphical representation of the scenario. The increase in the costs of production for the industries in turn affects the aggregate supply causing it to decline. This shift of the AS curve to the left also then causes the equilibrium price l evel to rise, in turn stir up inflation in the society (Cost- Push Inflation). The power tariffs enforce would further increase the industrial input cost which is already very high making the products more expensive in the domestic as well as the international market. As far as the international market is concerned, the competitive edge of a country would be wooly as their goods are more expensive in comparison to the other countries.