Table 1 shows measures of the percentage change in the price for electricity (column 1), the final consumption of electricity (column 2), and the mean income (adjusted for inflation) (column 3) in the UK between 2013 and 2022. Table 1: Electricity Prices, Consumption and Income in the UK. (1) Percentage change over 12 months - UK Electricity (2) ElectricityFinal UK Consumption (Temperature corrected) 27,116 (3) Mean real equivalised household disposable income of individuals (adjusted for CPI) - UK Year RPI 2013 7.4 34735 2014 5.5 26,501 36153 2015 -0.3 26,313 36875 2016 -0.2 26,152 38078 2017 6.7 25,920 37956 2018 8.6 25,870 37330 2019 7.2 25,472 37724 2020 0.2 24,297 39218 2021 6.6 24,622 38994 2022 49.1 23,538 39328 Source: OfS (2024) You are working as an economist for the National Grid company, and they need to predict what will happen to electricity consumption in 2023. The percentage change in electricity RPI is expected to be 13.7% in 2023. Your manager has asked you to: (a) Suggest a demand function to use in the modelling of future consumption and explain why this is appropriate based on Table 1; (b) Suggest other data that would be useful in making the prediction.
Table 1 shows measures of the percentage change in the price for electricity (column 1), the final consumption of electricity (column 2), and the mean income (adjusted for inflation) (column 3) in the UK between 2013 and 2022. Table 1: Electricity Prices, Consumption and Income in the UK. (1) Percentage change over 12 months - UK Electricity (2) ElectricityFinal UK Consumption (Temperature corrected) 27,116 (3) Mean real equivalised household disposable income of individuals (adjusted for CPI) - UK Year RPI 2013 7.4 34735 2014 5.5 26,501 36153 2015 -0.3 26,313 36875 2016 -0.2 26,152 38078 2017 6.7 25,920 37956 2018 8.6 25,870 37330 2019 7.2 25,472 37724 2020 0.2 24,297 39218 2021 6.6 24,622 38994 2022 49.1 23,538 39328 Source: OfS (2024) You are working as an economist for the National Grid company, and they need to predict what will happen to electricity consumption in 2023. The percentage change in electricity RPI is expected to be 13.7% in 2023. Your manager has asked you to: (a) Suggest a demand function to use in the modelling of future consumption and explain why this is appropriate based on Table 1; (b) Suggest other data that would be useful in making the prediction.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Table 1 shows measures of the percentage change in the price for electricity
(column 1), the final consumption of electricity (column 2), and the mean income
(adjusted for inflation) (column 3) in the UK between 2013 and 2022.
Table 1: Electricity Prices, Consumption and Income in the UK.
(1)
Percentage
change over
12 months -
UK Electricity
(2)
ElectricityFinal
UK Consumption
(Temperature
corrected)
27,116
(3)
Mean real equivalised
household disposable
income of individuals
(adjusted for CPI) - UK
Year
RPI
2013
7.4
34735
2014
5.5
26,501
36153
2015
-0.3
26,313
36875
2016
-0.2
26,152
38078
2017
6.7
25,920
37956
2018
8.6
25,870
37330
2019
7.2
25,472
37724
2020
0.2
24,297
39218
2021
6.6
24,622
38994
2022
49.1
23,538
39328
Source: OfS (2024)
You are working as an economist for the National Grid company, and they need to
predict what will happen to electricity consumption in 2023. The percentage change
in electricity RPI is expected to be 13.7% in 2023. Your manager has asked you
to:
(a) Suggest a demand function to use in the modelling of future consumption and
explain why this is appropriate based on Table 1;
(b) Suggest other data that would be useful in making the prediction.
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