You have been appointed to the planning commission for your country. Your nation has embarked on an intensive building program for economic development. Steel is very important for the building program’s successful implementation. You begin by analyzing the international market for steel. This will provide you with information about the future cost of the steel needed for construction.Please shift the S & D curves appropriately if necessary and locate the final equilibrium price and quantity. Make sure that you identify if the market for steel is a contracting or expanding market.
1. The international price of energy has recently increased substantially
Steel market is contracting. Steal productions is highly depending on energy price. In this case energy price increase will increase steal production costs. Part of suppliers will be pushed out of the market and total production will be decreased. Supply curve will move up and left.
2. The nation of Japan has increased the importation of steel
Steel market is expanding. In this case demand will be affected. Demand curve will move right and up.
3. US companies have aggressively marketed the use of heavy duty plastics as substitutes for steel in construction
Steel market is contracting. Substitute good is expanding. It means that demand curve will go down and to the left.
4. Germany, the world’s leading exporter of steel has introduced costly new environmental restrictions to the production of steel
Steel market is contracting. Supply curve will be affected. It will move up and left, supply will be decreasing because some suppliers will go out of the market.
5. The demand for steel will be high in the next few years in developing countries in AsiaSteel market is expanding. Producers expect growth in demand so supply will be increasing as well as demand.
Weight of each factor is determined by experts marks.
Steel market is expanding. Steel supply increases.
2. The nation of Japan has increased the export of steel
Steel market is expanding. Supply increases.
3. US companies have aggressively increased steel production
Steel market is expanding. Supply increases.
4. Germany, the world’s leading exporter of steel has introduced costly new environmental restrictions to the production of steel
Steel market is contracting. Supply curve will be affected. It will move up and left, supply will be decreasing because some producers will go out of the market.
5. The demand for steel will be lower in the next few years in developing countries in Asia.
Steel market is contracting. Demand will decrease along with supply.
General graph for case 2
Weight of each factor is determined by experts marks.
