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School of Social Sciences
Universiti Sains Malaysia
Semester 1, 2020/2021
SEU337 Energy Economics
Tutorial 1
(1) Explain, how do the following events affect the demand, supply and price in the coal
market? Use a diagram to explain your answer
a) The financial crisis has caused the economic downturn in Asia. Several areas of coal
were destroyed due to the war in a major coal-producing country.
b) Suppose the federal government loosened the money supply to reduce interest rates
and induce inflation so that cost of capital will reduce.
(2) Use the following competitive model of the coal market to answer the following questions:
𝑄𝑑=150 − 3𝑃
𝑐+ 1.5𝑃𝑠𝑏 − 5𝑃
𝑐𝑚 + 0.4𝑌
𝑄𝑠= −30 + 5𝑃
𝑐− 3𝑃𝑘− 0.5𝑃𝑙− 0.8𝑃
𝑛𝑟
