Economics Assignment: Supply and Demand Shock, Plastic Bag Ban, Circular Flow of Money

Running head: ECONOMICS ASSIGNMENT
Economics Assignment
Name of the student:
Name of the University:
Author note

1ECONOMICS ASSIGNMENT
Table of Contents
Answer 1:...................................................................................................................................3
a:.............................................................................................................................................3
b:.............................................................................................................................................4
c:.............................................................................................................................................4
d:.............................................................................................................................................5
Answer 2:...................................................................................................................................6
a:.............................................................................................................................................6
b:.............................................................................................................................................6
c:.............................................................................................................................................7
d:.............................................................................................................................................7
e:.............................................................................................................................................7
Answer 3:...................................................................................................................................8
a:.............................................................................................................................................8
b:.............................................................................................................................................8
c:.............................................................................................................................................8
d:.............................................................................................................................................8
e:.............................................................................................................................................8
Answer 4:...................................................................................................................................9
a:.............................................................................................................................................9
b:.............................................................................................................................................9
c:...........................................................................................................................................10
d:...........................................................................................................................................10
e:...........................................................................................................................................11
Reference:................................................................................................................................12

2ECONOMICS ASSIGNMENT
Answer 1:
a:
As per the given resource, since 1980 to 2005, there has been a supply shock sourced
by the anaemic rate of growth from the economically maturing developed world
(Harboraluminum.com, 2018). Post this period, there has been demand shock of the
aluminium due to the technological breakthrough in the production of aluminium that
reduced the price and availability of the cheap stranded energy reduced the cost of production
of the same and the output of the aluminium has been enhanced by a large amount.
Figure 1: demand and supply shock
Source: (Cashin et al., 2014)
In case of rise in production positive demand shock comes into existence that lead to
rise in the price as well as output. Figure 1 depicts that demand has raised from AD to AD’
and thus price has been increased from P’ to P. on the other hand, supply shock can lead to

3ECONOMICS ASSIGNMENT
fall in the production that shifts the supply curve from AS’ to AS that will enhance the price
from P’ to P.
As per the given resource, short-term trends are unexpected and comes in the form of
seasonal or cyclical nature, whereas long term trends are seems to have identified price
direction.
b:
Under tariff situation cost of inputs for the can producer will be enhanced and it will
enhance the cost of final product.
Figure 2: Profit maximisation
Source:
Under tariff, price of the importable will rise and the price of the cans will be
enhanced as well. Considering the given firm, with its limited market power, it will enhance
the price from Pw pre tariff equilibrium price to Pw+t where the output will rise from S1 to S2.
c: