Foundations of Economics
Paper, Order, or Assignment Requirements
From the article that i will upload please answer these questions about BRITISH GAS by using references
1) Demand – Supply
– Law of demand and supply?
– If the price of gas increases/decrease what happens to the Qd and Qs?
– What would be the behaviour of the consumers and producers?
– Substitution effect? Complementary effect?
– What would be the effects of a price increase in other industries?
– What type of good is gas? Is it elastic, unit elastic, inelastic?
– Then what would happen to the firm’s revenue when price of gas goes up/down?
– If the energy market is very attractive for suppliers what would happen to the supply? Why?
– Can this elasticity/inelasticity/unit elasticity for gas change in the long run? How?
– What would you expect firms to do in the case of cost related price increases? I.e. Do they bear the increasing costs of inputs or pass onto the customers?
– Who are the rivals in the UK energy market?
– What kind of market is this? I.e. What is the degree of competition in the market? Give your justification for your answer.
– What type of conditions might occur due to this market structure?
– If government wants to create a more competitive market for gas, what kind of actions it might take?
– If government is successful, then what would be the effect of these actions on the market in terms of supply and demand?
– How would government’s actions affect the behaviour of current suppliers in terms of price?
4) Government Intervention
– How government might intervene to the market? What would be the effect of such an action?
– If that happens, how the behaviour of the producers would change? How that would affect prices?
– If any, what type of tax do consumers pay for gas purchases? What is the feature of this type of tax?
5) Stock exchange
– If the firm increases its price, what would happen to its shares in the stock exchange?
– What happens if the energy prices goes down?