Answer the following questions ensuring that you apply economic principles or theory related to (a) the concepts of supply and demand for Question 1 and (b) the concepts of specialisation and exchange for Question 2 to inform your analysis and support your decisions. Communicate your ideas with correct grammar, spelling and writing style and support your answers with diagrams as necessary.
Question 1 (10 marks)
Drawing on your knowledge of the theory of demand and supply – supplemented by appropriate media reports – explain what has been happening to the price of gas in Australia over the last ten years.
Question 2 (10 marks)
Drawing on your knowledge of the theory of specialisation and exchange – supplemented by appropriate media reports – explain what the consequences of rising energy costs will be for heavy industry in Australia.