Q2 solution needed i need in words not handwritten solution Q1: The October 30th, 2021 edition of The Economist included an article titled “As EnergyPrices Spike, Governments Reach for the Dirtiest Tool in the Box.” (It is not necessary foryou to read the article; we will provide all relevant information in the questions we ask).The “dirty tool” in question is fossil-fuel subsidies. For Question 1, consider the marketfor natural gas in January 2020, prior to the onset of the Covid pandemic and before anychanges described in The Economist article. Assume that in January 2020, natural gasprices were in a short-run equilibrium.• Draw a graph that shows supply and demand analysis for gas in January2020. This graph will serve as a starting point for your analysis inQuestions 2, 3, 4, and 5.• In drawing this graph, please assume that the demand curve is downwardsloping and the supply curve is upward sloping.• Clearly show the market equilibrium in January 2020.• Please remember to clearly label your axes, with P on the vertical axis andQ on the horizontal axis.• Label the supply curve as S0; demand curve as D0; the equilibrium priceas P0; and equilibrium quantity as Q0 Q2:: In the spring of 2021, demand for natural gas increased dramatically. Indeed, gas pricesgrew by over 200% in the last 6 months. Your task as an analyst is to analyze thechanges in the market for gas.• Using your graph from Question 1, depict the changes that took place inthe gas market. Clearly show and explain any shifts in demand and/orsupply curves. Label any shifted curves as D1 and/or S1; and show thedirection of the shift graphically with an arrow. If the curves have notshifted, please explain why.• Clearly show the new market equilibrium if changed from your answer toQuestion 1. Label the new equilibrium price as P1 and equilibrium quantityas Q1. Explain in your narrative what happened to price and quantity as aresult of the increase in demand.
Q2 solution needed
i need in words
not handwritten solution
Q1: The October 30th, 2021 edition of The Economist included an article titled “As Energy
Prices Spike, Governments Reach for the Dirtiest Tool in the Box.” (It is not necessary for
you to read the article; we will provide all relevant information in the questions we ask).
The “dirty tool” in question is fossil-fuel subsidies. For Question 1, consider the market
for natural gas in January 2020, prior to the onset of the Covid pandemic and before any
changes described in The Economist article. Assume that in January 2020, natural gas
prices were in a short-run equilibrium.
• Draw a graph that shows
2020. This graph will serve as a starting point for your analysis in
Questions 2, 3, 4, and 5.
• In drawing this graph, please assume that the demand curve is downward
sloping and the supply curve is upward sloping.
• Clearly show the
• Please remember to clearly label your axes, with P on the vertical axis and
Q on the horizontal axis.
• Label the supply curve as S0; demand curve as D0; the
as P0; and
Q2::
In the spring of 2021, demand for natural gas increased dramatically. Indeed, gas prices
grew by over 200% in the last 6 months. Your task as an analyst is to analyze the
changes in the market for gas.
• Using your graph from Question 1, depict the changes that took place in
the gas market. Clearly show and explain any shifts in demand and/or
supply curves. Label any shifted curves as D1 and/or S1; and show the
direction of the shift graphically with an arrow. If the curves have not
shifted, please explain why.
• Clearly show the new market equilibrium if changed from your answer to
Question 1. Label the new equilibrium price as P1 and equilibrium quantity
as Q1. Explain in your narrative what happened to price and quantity as a
result of the increase in demand.
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