a. Explain why the world price of palm oil increases as the result of the impact of Russia-Ukraine conflict by analyzing the world market of palm oil. (Hint: In this part, you consider the whole world as a market). Illustrate your analysis with a diagram of the world market.
b. Assume Indonesia participates in free trade and is a price taker in the world
market. Analyse the effect of an increase in the world price of palm oil on the domestic market in Indonesia. Who gains and who loses from the increase of the world price of palm oil? Illustrate your analysis with a diagram.
c. Given the situation in part (b), the Indonesian government decided to impose
price control and provide subsidies to ensure supply. What kind of price control was introduced? Discuss the effect of price control in theory and in reality. Analyze how the price control and subsidy can improve the situation when the government banned the export. Illustrate your analysis with a diagram