Here , we request that you only ask one question per post. I will answer Question B from this post. I would note, however, that Question B essentially gives you the answer for Question A, telling you that a subsidy causes an increase in supply. To answer Question A, draw a graph with two supply curves, and indicate that the subsidy causes a movement from one supply curve to the other.
Question B asks...
Here , we request that you only ask one question per post. I will answer Question B from this post. I would note, however, that Question B essentially gives you the answer for Question A, telling you that a subsidy causes an increase in supply. To answer Question A, draw a graph with two supply curves, and indicate that the subsidy causes a movement from one supply curve to the other.
Question B asks for three factors that could cause a decrease in the supply of petrol. The supply of petrol often depends more on geopolitical factors than on economic ones. A major factor that could reduce the supply of petrol would be a war or further instability in the Middle East. For years, the supply of crude oil (from which petrol is made) was curtailed because Iraq was in chaos and could not export. If something like this were to happen again, the supply of petrol would decline. A second factor would be the choices made by suppliers of oil. Right now, the price of crude is so low that many oil producing countries would like to reduce production so as to increase the price. If the major producers of the world decided to reduce production, supply would decline. A third factor that could decrease the supply of petrol would be taxation. As governments around the world start to worry about climate change, it becomes more likely that a carbon tax could be imposed. This would increase the cost of producing petrol, thus causing the supply to drop.
All of these factors could cause the supply of petrol worldwide (and thus in Malaysia as well) to decline.
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