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Electricity has been supplied to households every day of the year for as long as I can remember. It is a source the majority of us in this day and age cannot manage to be without. The attempt at regulating price in the electricity industry is a troublesome one where the objective is to not only try to minimise the cost to consumers, but also to create a rate structure that will entice the power company to remain within the industry/competiton. The distribution of electricity remains regulated to ensure reliable service to all consumers and to set distribution rates based on cost and performance whilst trying to aim it at market prices. Today we are looking at companies who supply elctricity to households within our economy. Part (a) of our assignment requires us to draw a budget line for an average household labeling the intercepts and the slope of the budget line. Please refer to the following diagram. (diagram A & B) A – B: First Budget Line A – C: New Budget Line The above diagram illustrates that at point ‘A’ the average household consumes majority of all other goods but little electricity. At point ‘B’ the household begins to use a fair amount or more electricity but no other good