Eskom is South Africa's monopoly power producer, which the majority of South African depend on. An imperical study was conducted by Nkosi (2020) on the relationship between Eskom's debt and government debt. Using the Vector Autoregressive (VAR) MODEL, the study found that the electricity price explains 29,51 %of the forecast err varience 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 is the impact on the demand for the alternative power? Use the relevant diagrams