Illustrate the effect of the cold spell on the demand for gas using a demand curve diagram. Illustrate the effect of the national grid instructing major gas users to reduce demand. Analysis two other factors that you think influence demand for gas. Do you think demand for gas is price elastic or price inelastic? Explain your reasoning.

1. PRINCIPLES OF ECONOMICS
P R E S E N T A T I O N

2. Asif Mahmood Abbas - 41531047
TEAM MEMBER

3. Illustrate the effect of the cold spell on the demand for gas using a demand curve
diagram.
QUESTION 1

4. EFFECT OF COLD SPELL ON
P R I C E O F G A S

5. EFFECT OF COLD SPELL ON
P R I C E O F G A S
Shift of a demand curve takes place when
there is a change in any non-price
determinant of demand, resulting in a new
demand curve.
Non-price determinants of demand are
those things that will cause demand to
change even if prices remain the same.
So, any circumstance that affects the
consumer's willingness or ability to buy the
good or service in question can be a non-
price determinant of demand.

6. As a result of cold spell in UK the demand
of gas jumps to 454 cubic meters from
449 cubic meters for the same price.
Here weather is the factor that causes
change in demand of gas.
Due to non-price determinant cold
consumer demanding more gas at same
price.
EFFECT OF COLD SPELL ON
P R I C E O F G A S

7. In the graph demand curve will shift
upward from D1 to D2.
Where price remain same for both
Demand curve.
EFFECT OF COLD SPELL ON
P R I C E O F G A S

8. Illustrate the effect of the national grid instructing major gas users to reduce
demand.
QUESTION 2

9. EFFECT OF NATIONAL GRID TO
R E D U C E G A S D E M A N D

10. Due to excessive Demand govt. authority is
in fear of Demand – Supply mismatch,
which will result in price rising moreover
consumer will suffer as a result of this
crisis.
To get rid of this problem national Grid
instructed major gas users to reduce their
demand so that demand remain in the
level of supply as National grid instruct
suppliers to supply more.EFFECT OF NATIONAL GRID TO
R E D U C E G A S
D E M A N D
Demand and Supply in Balance

11. If supplier increase their supply and
simultaneously major gas users demand
less due to authority instructions then then
both supply and demand will remain in a
balance.
EFFECT OF NATIONAL GRID TO
R E D U C E G A S
D E M A N D
Price change due to Demand and Supply change

12. Analysis two other factors that you think influence demand for gas.
QUESTION 3

13. FACTORS THAT INFLUENCED
D E M A N D F O R G A S

14. Supplementary Goods
Here the supplementary product of gas is
Coal so if the price of Coal remain cheap
then consumer will care coal more than
gas which will decrease demand of gas as
a result demand curve will move
downwards which will reduce price at the
same time demand for coal will increase .FACTORS THAT
INFLUENCED
D E M A N D
F O R G A S

15. Tax Increase
Another factor that can influence demand
of gas is tax.
Higher Tax on gas price will result higher
price and higher price will discourage gas
users and motivate them to choose coal.
That will reduce demand for gas.FACTORS THAT
INFLUENCED
D E M A N D
F O R G A S

16. Do you think demand for gas is price elastic or price inelastic?
Explain your reasoning.
QUESTION 4

17. DEMAND FOR GAS IS PRICE
E L A S T I C O R I N E L A S T I C ?

18. Price elasticity of demand (PED or ED) is a
measure used in economics to show the
responsiveness, or elasticity, of the
quantity demanded of a good or service to
a change in its price.
Price elasticity depends on several factors
such as substitute goods, complementary
goods, income, consumers responsiveness
etc.
DEMAND FOR
GAS IS PRICE
E L A S T I C O R
I N E L A S T I C ?

19. Availability of substitute goods, the more
and closer the substitutes available, the
higher the elasticity is likely to be, as
people can easily switch from one good to
another if an even minor price change is
made.
There is a strong substitution effect.
If no close substitutes are available, the
substitution effect will be small and the
demand inelastic.
DEMAND FOR
GAS IS PRICE
E L A S T I C O R
I N E L A S T I C ?

20. It can be said easily that gas is elastic but
not perfectly elastic.
With little change in price, gas consumer
with shift to coal.
So changes in price will change quantity
demanded in gas quickly.
DEMAND FOR
GAS IS PRICE
E L A S T I C O R
I N E L A S T I C ?

21. But if the generator company had gas as
only option then it would be inelastic as
they left no options and had to buy gas in
each price.
DEMAND FOR
GAS IS PRICE
E L A S T I C O R
I N E L A S T I C ?

22. THANK YOU
W E A R E O P E N F O R Q U E S T I O N S