The national electricity supplier in South Africa has applied for a 16% price hike over five years to the National energy regulator of South Africa (NERSA) which will see them not requesting for any increase in electricity tariffs up to 2018

Use the AD-AS analysis to evaluate the type of inflation and it's resulting effect on production,income and employment since the above application by Eskom was approved by NERSA. What course of action,do you think NERSA should take based on effects discussed above?