F.4 Economic: News Analysis
Mimi Liu (20)
F.4A
The newspaper article is talking about The Hong Kong Electric Co. Ltd has
handed in the evaluation for the price of the electricity to the government. And The
Hong Kong Electric Co. Ltd said that there was a pressure that they would increase
the market price of the electricity in the future as the coats of coal had increased. On
the other hand, the newspaper article said that other places such as USA, British were
also having this economic phenomenon.
The reason for this economic phenomenon is because when there was a change in the
price of input, it will cause the producer to change the supply. In this economic
phenomenon, coal is the input of the electricity, when the price of coal increase, the
production cost of The Hong Kong Electric Co. Ltd will also increase, then their
profits will decrease, and they will decrease the supply of the electricity. Since there
was a decrease in supply of the electricity(S0->S1), it will cause an increase in the
equilibrium price of the electricity(P0->P1), then the equilibrium quantity and the
equilibrium transacted will also decrease(Q0->Q1).
An increase in the price of coal