Exercise One: Energy Costs
Read "It's Going to Be a Lot More Expensive to Heat Your Home This Winter. Here's What to
Expect"
Use the market model to illustrate what the article describes. To do this, you will need to answer the following:
a. Which is changing; supply, or demand?
The demand for heating has shifted due to colder winters than in previous periods. This change in weather conditions has led to an increase in heating systems.
b. Does the change identified lead to an increase or decrease?
The change identified, which is a shift in demand for heating due to colder winters, typically leads to an increase in consumption. In colder weather, people tend to use heating systems, meaning that increased demand for heating services and increased costs associated with heating.
c. What factors are causing or contributing to the change? Cite evidence from the news article that backs up your statement.
The factors that are causing or contributing to the change would be war and summer like TIME said, "Russia's invasion of Ukraine, which has put a strain on global energy supplies, is likely the main source of rising heating costs, energy experts say..." (Nik Popli, 2022) Also, "Electric companies used up a significant amount of their natural gas reserves this summer to power air conditioning as Americans needed to cool down from the third-hottest summer on record." (Nik Popli, 2022) Those are the two big factors as why heating costs is going up the supply hasn't been able to keep up with the demand.
2. Sketch a market model that illustrates what is going on in the article based on your documented problem-solving. Sketch the model based on your answers in part 2. Show the initial market equilibrium price as either " P1 " or " P " and market equilibrium quantity as either " Q1 " or " Q *." Draw the change in the appropriate curve, using an arrow to show the direction of the change and label the new curve as either "New Demand" or "New Supply." Label the new market equilibrium price and quantity and label those points "P2" and "Q2". State the impact of the change in the market equilibrium price and quantity in the energy market (is the market equilibrium price and quantity increasing, decreasing or staying the same?).
Exercise One:Energy Costs Read "It's Going to Be a Lot More Expensive to Heat Your Home This Winter. Here's What to Expect"
1. Use the market model to illustrate what the article describes.To do this,you will need to answer the following: a.Which is changing; supply, or demand? The demand for heating has shifted due to colder winters than in previous periods. This
change in weather conditions has led to an increase in heating systems.
b. Does the change identified lead to an increase or decrease?
The change identified, which is a shift in demand for heating due to colder winters, typically leads to an increase in consumption.In colder weather,people tend to use heating
systems,meaning that increased demand for heating services and increased costs associated with heating.
c. What factors are causing or contributing to the change? Cite evidence from the news article that backs up your statement.
The factors that are causing or contributing to the change would be war and summer like TIME said,"Russia's invasion of Ukraine,which has put a strain on global energy supplies,is likely the
companies used up a significant amount of their natural gas reserves this summer to power air conditioning as Americans needed to cool down from the third-hottest summer on record."(Nik Popli,2022)Those are the two big factors as why heating costs is going up the supply hasn't been able to keep up with the demand.
2. Sketch a market model that illustrates what is going on in the article based on your documented problem-solving. Sketch the model based on your answers in part 2. Show the initial market equilibrium price as either"P1or"p*"and market equilibrium quantity as either"Q1or"Q* Draw the change in the appropriate curve, using an arrow to show the direction of the change and label the new curve as either"New Demand"or"New Supply."Label the new market equilibrium price and quantity and label those points"P2"and"Q2".State the impact of the change in the market equilibrium price and quantity in the energy market (is the market equilibrium price and quantity increasing,decreasing or staying the same?).
