Eskom is South Africa 's monopoly power producer, which the majority of South Africans depend on. An emperical study was conducted by Nkosi /on the relationship between Eskom' s debt and government debt. Using a Vector Autoregressive model, the study found that the electricity price explains 29,51 of the forecast error variance in Eskom 's revenue. This means 29.51%) of Eskom' s revenue is from increases in the electricity price.

Suppose there is an Introduction of another power producer and Eskom increases its electricity price. What was the impact on the demand for alternative power? Use the relevant diagram