Question

Explain how, in any two ways, demand for electricity can be decreased when price elasticity of demand is extremely low.

Answer 1

Demand for electricity can be reduced in following ways:
(I) Using Energy Efficiency Electric Appliances: Air conditioners, washing machines, refrigerators and water heaters are biggest electricity using appliances at home. These appliances have efficiency rating ranging from 1 to 5 stars. The government should make it mandatory to fix efficiency labels on the appliances. This will prompt the buyers to buy efficient appliances. Accordingly, demand for electricity is expected to reduce. The appliances having higher number of stars are considered more efficient.They consume two to ten times less electricity. Thus, using these efficient electric appliances, we can reduce our demand for electricity.
(ii) Subsidy on Solar Energy: The government can give subsidy on the purchase of solar energy equipment. So that, the people are induced to shift from electricity to solar energy. Accordingly, demand for electricity will reduce. States like Haryana are already pursuing this policy.