“Report on Multiple Regression”

Price of Electricity
Group -
Section -

Submitted To:

Umama Rahman
Lecturer,
North South University

Submitted By:

1. D
2. S
3. D
Letter of submission

2nd October, 2020

Umama Rahman
Lecturer, Department of Management,
NSUSBE

Subject: Electricity Price with Respect to Income Per Household and Quantity Demand of
Electricity

Dear Miss,

With all due respect, we are submitting our group project on the title “Electricity Price with
Respect to Income Per Household and Quantity Demand of Electricity” that were given to us.
We are enlightened to get the opportunity to complete the entire projects per your instruction
which gave us real life information about BUS173. Our project is based on how the price of
electricity is affected by Income per household and quantity demand of electricity. We hope this
project meets all your expectations and fulfill every criterion to get your approval. It would be a
great honor to us to answer any queries of you having regarding this project work.

Yours obediently,

Name
On behalf of our group
Executive Summary:

Electricity is one of the cleanest and most efficient terminal energies in the modern world.
Regardless of whether they are fossil fuels-based or renewable, most of the energies will finally
divert into electricity continuously. Therefore, electricity has become the preferred and dominant
form of energy used in households in developed and fast developing countries, satisfying a
varied range of needs from necessities to recreational and luxury consumption. Therefore, the
price of electricity and its proportion to total energy consumption and people’s income are
important benchmarks for measuring the extent of living modernization.

Our estimate of income elasticity and the price of the electricity finds a great correlation as well
as the quantity demand of electricity. The primary reason for this correlation is that our model
includes control variables. The effects of such variables can be manifested in income elasticity,
although they are very strong. By running a test on Stata software to check and identify how
much the dependent variable “Electricity price” is affected by the independent variables Income
per household and the quantity demand of electricity. Notably, the low level of income is the
reason that the price of the electricity became in a downward cause at that time the quantity
demand of the electricity also goes down. At low income levels, residents will allocate more
money to satisfy their electricity needs as their incomes increase, leading to high income
elasticity. However, when the income reaches a certain threshold that enables households to
possess energy-efficient appliances sufficient to meet their needs, the level of residential
electricity consumption will be stable or decline, thus reducing the income elasticity.
Dependent Variable of the Research:

As the price of electricity is always dependent on how the market demand of the electricity exist
as well as the income per house hold, our dependent variable is “Price of Electricity”. The price
of electricity will not be same in Bangladesh and Germany as the income per household is not
same. And electricity price is shifting in a particular country because the quantity demand is not
always same.

Independent Variable of the Research:

As, people’s income per household don’t depends on how much the price of electricity is and
also demands isn’t dependent on the price, our independent variable is “Income per household
& Quantity demand of Electricity”.

Expectations:

We expect positive correlation between price of electricity and income per household. We think
when income per household rises, people can afford to expend more money on electricity and on
that basis the price can go higher than previous. Because as income per household rises, people
will be more comfortable to expend money.

We expect a high positive correlation between electricity price and quantity demand of
electricity. Because we all know that when the demand is high, then there is a lot of people who
can buy a product in higher price. At that time, there is a chance to create a shortage of products.
So that the price will go high.
Literature Review:

Price of Electricity & Income per household: