Economics Assignment: Supply, Demand, and International Trade Analysis

This economics assignment solution addresses several key economic concepts. Part 1 analyzes the effects of a price ceiling, illustrating how it can lead to shortages and excess demand by comparing the quantity demanded and supplied. Part 2 and 3 delve into the concepts of absolute and comparative advantage using production possibility frontiers, demonstrating how countries benefit from specializing in production and engaging in trade, specifically in the context of wine and cheese production. Finally, the assignment examines the effects of new technologies in the market, such as electric vehicles and solar panels, on supply, demand, and equilibrium prices. The solution includes detailed explanations, diagrams, and a reference list to support the analysis.

Running head: ECONOMICS ASSIGNENT
Economics assignment
Name of the student
Name of the University
Author note

ECONOMICS ASSIGNENT
ANSWER 31
Part 1
Paert2
When the government imposed price ceiling, the sellers wanted to sell only 2 units of
electricity and the buyers wants to consume 4 units of electricity.
Part 3
As the price ceiling is set below the market price, the producers will start producing
leas which will lead to shortage in the economy. As the supply will start falling, there will be
shortage in the supply of the products and will also led to excess demand in the market. As in
this case demand outstrips supply, people will start demanding more of the product due to fall
in price and therefore it leads to shortage of goods.
The red line suggests the amount of shortage of goods in the economy.
E1P1
Q1
Price ceiling
QS QD

6
4 Cheese
3
2
A
ECONOMICS ASSIGNENT
Part 4
Quantity supplied by the producers is 2 units of electricity and quantity demanded
will be 4 units of electricity.
The quantity supplied after price ceiling is 2 units of electricity, however the equilibrium
point without any price control is 7 units of electricity.
Answer 32
Part1and 2
PPF of France
Wine

1
2 Cheese
1/2
1
X
ECONOMICS ASSIGNENT
PPF of Italy
Part3
France have an absolute advantage in the manufacturing of cheese.
France also has an absolute advantage in the making of wine.
wine cheese
France 6 4
Italy 1 2
Wine

P1
D
S
Q1
S3
E3
D2
E2
ECONOMICS ASSIGNENT
For producing 1 unit of wine France have to give up 4/6 units of cheese
For producing 1 unit of wine Italy have to give up 2 units of cheese.
As France have to give up less amount of cheese to produce wine, France have the
comparative advantage in producing wine.
For producing one unit of cheese France have to give up 6/4 units of wine
For producing one unit of cheese Italy had to give up ½ units of wine.
As Italy had to give up less amount of wine to produce cheese, it had an comparative
advantage in producing cheese.
Part 4
When the both the countries engages in trade France will export 3units of wine in
order to get 3 units of cheese and Italy will export 1 unit of cheese in order to gain 1 unit of
wine.
Answer 33
Part1
When new types of electric vehicles entered in the market, price of the electric
vehicles decreases with the increase in the supply of electric vehicles. As the price of electric

ECONOMICS ASSIGNENT
vehicles decreases there will be a rise in the solar panels . As electric vehicles are charged
using solar panels, there and the equilibrium point moves to E2. The equilibrium price is P2.
PART2
When a new technology is introduced in the market which improves the production of
solar panels, there will be a rise in the solar panels production. The supply curve shifts
downward which means increase in supply. The new supply curve is marked as S3.
PART3
When the new technology enters he market which improves the production of solar
panels, the supply of solar panels will rise which will lead to rise in the quantity. On the other
hand with the rise in demand for solar panels, the price of solar panels will also increase.

ECONOMICS ASSIGNENT
Reference list
Brown, David P., Andrew Eckert, and Heather Eckert. "Electricity markets in transition:
market distortions associated with retail price controls." The Electricity Journal 30.5 (2017):
32-37.
Laursen, Keld. "Revealed comparative advantage and the alternatives as measures of
international specialization." Eurasian Business Review 5.1 (2015): 99-115.
Levchenko, Andrei A., and Jing Zhang. "The evolution of comparative advantage:
Measurement and welfare implications." Journal of Monetary Economics 78 (2016): 96-111.
Low, Patrick. "International trade and the environment." UNISIA 30 (2016): 95-99.
MANNING, RICHARD. "production-possibility frontier." Production Sets (2014): 51.
Ruttan, V., and Colin Thirtle. The role of demand and supply in the generation and diffusion
of technical change. Routledge, 2014.