• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

California Heat Wave Causes Power Shortages, Extreme Weather Grips State. Economics Commentary

Extracts from this document...

Introduction

California Heat Wave Causes Power Shortages, Extreme Weather Grips State. Demand and supply are two very important things within an economy, and without them, firms would not and could not exist. These terms are considered the basics of economics but are still extremely important to understand. The demand for a good or service is the quantity of which consumers are able and willing to purchase at a certain price and time period within an economy. A typical example of this can be shown with the demand curve: Demand Curve The demand curve (left) shows the relationship between price and quantity in demand, with the price being at P1, quantity at Q1 and demand D which is demanded by consumers. The demand for products is not always the same, the demand increases and decreases according to several factors. ...read more.

Middle

Again just like in the demand for a good or service if the price of the product changes there will be a movement along the supply curve. But any other factors such as the costs of factors of production (costs of resources, labour, etc.), technology improvements (machinery upgrades), etc. will cause the supply curve to shift either to the left or right. In Los Angeles, California in March 2007 there was a very worrying heat wave sweeping this part of the country, which reached over 100 degrees Fahrenheit. This caused an extremely large increase in the demand for electricity because people were using cooling appliances which require so much electricity to function such as air-conditioners. Because of the increased demand, the supply was increased to the maximum possible but with demand topping supply capabilities this left few homes without an electricity supply. ...read more.

Conclusion

Again the price has remained the same because electricity is at a fixed price rate. This firm has increased output to meet the demand or power outages will be created. Due to the sudden changes in climate the power companies were unable to meet the increasing demand for electricity, even though it was operating at maximum capacity. This caused a shift to the right in the quantity demanded and the quantity supplied of the two curves. There were still people without electricity due to the fact that these air-conditioners were being used to cool homes and also public cooling stations, on top of everyday appliances which require electricity too. This caused an excess demand in the economy because the power company could not supply enough electricity to meet the demand at the time of the heat wave. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Economics essays

  1. Macro Economics Notes

    Disadvantages: - The money injected into the circular flow through increased government spending or lowering taxes has to be repaid - the current fiscal stimulus package of USA has increased USA's national debt by an additional 1 trillion $ - The question will always be asked - are these jobs that are created really long term jobs or merely temporary.

  2. Wealth Doesnt Require Morals

    Wealth polarization derived primarily from industrial and population expansion. One negative aspect of this societal construction was vulnerability. If one of those immensely wealthy figures fell, it would damage the economy and as such the economy essentially revolved around the wealthy.

  1. Growth and Development Problem Set - IB Economics exam questions and answers.

    produced over a period of time (usually a year) per capita. Sustainable development is defined as "development which meets the needs of the present without compromising the ability of future generations to meet their own needs." External cost is a consequence of an economic activity that is experienced by unrelated third parties.

  2. The luxembourg Economy (Complete Review)

    This high unemployment rate is often associated with the strong welfare benefits and safety nets for the unemployed. It is believed that these benefits do not offer an adequate incentive for the unemployed to successfully seek employment. Relaxed welfare policies like these are quite necessary in short term, as they

  1. Theories on the Causes of the Great Depression

    First it was good but after a while the banks were not able to pay the money back, so that is why many banks closed down. Moreover, after the stock market crash in 1929, there was a panic and people withdrew their money from the banks which caused that even more banks went out of business.

  2. IB economics commentary - Demand and Supply

    Meanwhile, head of the Agricultural Production Committee at the Shura Council Hussein Mohamed Hegazi agreed that the Ministry of Agriculture is to blame for high vegetable and fruit prices, though for different reasons.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work