Electricity Demand and Supply Pakistan

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Electricity Demand and Supply Pakistan

By | November 2013
Page 1 of 4
Electricity load-shedding in Pakistan is one of the biggest domestic problems faced by the country. Along with the problems that the power shortage brings for the society as a whole and for the inhabitants of the society the power failures seriously curbs the economic potential of the economy. Considering most of the medium and large scale industries of Pakistan depend on machinery that is run by electricity they are heavily dependent on the electricity supply, with the electricity supply cut their production capacity decreases dramatically as well. Since most of Pakistani manufacturing industries lack the self generation ability hence this power outage is even more harmful to their business. So eventually what ends up happening is that along with creating general distress among the public this power shortage reduces the production capacity of the firms and hence reduces the aggregate supply. Aggregate supply can be defined as the total supply of goods and services that firms in a national economy plan on selling during a specific time period. It is the total amount of goods and services that firms are willing to sell at a given price level in an economy. It is the total amount of goods and services that firms are willing to sell at a given price level in an economy. In the long run, the aggregate-supply curve is assumed to be vertical In the short run, the aggregate-supply curve is assumed to be upward sloping SRAS (Short run aggregate demand) shows total planned output when prices in the economy can change but the prices and productivity of all factor inputs e.g. wage 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 wage rates can change – it is a measure of a country’s potential output and the concept is linked strongly to that of the production possibility frontier The SRAS and LRAS can be graphically represented as follows:

SRAS

LRAS...