Reading the article and answer questions Order 956309
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Reading the article and answer questions Order 956309
- (5) Define the rebound effect of energy efficiency standards in your own words and describe how and why it occurs. i.e., how does setting a maximum energy efficiency for appliances (which effectively change the price of energy for households) affect consumption of energy?
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The rebound effects in energy efficiency mean that the more people try to increase energy efficiency, it leads to the less saving of energy. The standards caused by the issue of energy efficiency mean that more energy will be used because of efficiency being discovered, hence reducing the standards. The rebound effect of energy efficiency standards occurs because of the need to use more of the appliance that is energy efficient hence making the saving to be decreased as more households will adopt its use. Setting maximum energy efficiency for appliances ensures that the consumption of energy is increased.
- (5) Energy efficiency improvements, while a CAC, essentially change the price of energy. In what direction? How do you expect this to affect energy (gasoline) consumption (miles driven or several hours an air conditioner is used)?
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The direction will be in the upward direction. The energy consumed in the air conditioners is increased as there is more energy efficiency application in the appliance.
Microeconomic rebound effect
- (10) Related to #2, describe the substitution effectand the income effect of the price change you have just identified for the case of either
(a) an energy efficiency improvement in home appliances or
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In the first instance (a), the use of an energy-efficient improvement of the appliance swill means a change in the type of appliance being used so that an energy efficient one is acquired. There is an income effect on the appliance, and a substitution effect occurs when a more expensive energy-efficient appliance is purchased.
(10) Describe the two macroeconomic rebound effects – macro price effect (Be able to explain Figure 1) and macro growth effect
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Macro price effect:
In simple terms, the macroeconomic price effects entail the system by which the various entities in an economy are related to the microeconomic rebound effects as it involves the functionalities of prices. The rebound effect is better explained through a graph that shows the changes in the market demand curve when there is a change in energy efficiency. The graphs entail a Y-axis having the price in the general economy, and the X-axis has the Quantity demanded. To best explain the graph, an example is highlighted in global oil prices. The market demand curves postulate to the left, and the supply of oil postulates to the right. A shift in the demand of the oil from a point D towards a point D1 shows a decreased demand in Quantity for the energy, as shown in the price change from (a) to (b). Equilibrium in the price and the quantity demanded will be met at point (c). As such, the efficiency of the global oil price will have a magnitude rebound effect on the curve S, where there is observed inelastic demand for the product, which causes an increase in the price.
Macroeconomic growth effect:
In general, economics and particularly the use of oil in the global scene explain the growth effect. When there is required efficient use of the economy’s factors such as energy, the effect will cause people to ensure that policies set are followed to the letter, and the usage of energy will rise. The explanation is also explained in the issue of innovation where a macroeconomic growth in the rebound effects for innovation will increase the desire to effectively cause a rise in energy use and, hence, the general increase in the resources sold to cause economic growth.