Extract of taken from college notes 16/06/98
Transformers are very efficient components. Typically they boast efficiency levels of better than 95%. This means that only a mere 5% of the total power is lost. Consumed / wasted in the form of heat. Transformers work on the principle of self-induction, and because of this, there is almost perfect isolation between the primary & secondary windings. With this infinite impedance between the two windings, power transformers are deemed very safe.
By Faraday's law of magnetic induction, when an alternating current is applied to the primary windings, a voltage will be self-induced in the secondary. These windings must be close wound. Secondary power is introduced from the primary because of the changing magnetic field between the two.
When a voltage is applied to the primary a magnetic field is set up, and if the frequency is high enough the primary windings will begin to radiate its power to the secondary. The voltage that is produced on the secondary is directly proportional to the turns ratio.
In short, minus all the math, magnetism theory, that's how a transformer works.
Trent Jackson
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