3. Read the following article first: https://www.ft.com/content/d739cd47-e434-43c3-9b4e- 472bcef4abaf?shareType=nongift (also available on Canvas) The graph below shows the shipping prices (sea freight) during 2019-2023. You will use a supply- demand model to analyze changes in shipping price in the graph below. (30 points) Short-term shipping costs have sunk back to pre-pandemic levels Cost of taking 40ft container from east Asia to US west coast (short-term rates, 5) - Market average 80DD 600D GOOD 2000 6TOZ 2020 2021 2022 2023 Source Xeneta OFT a. First, make a supply-demand graph for sea freight. Correctly label demand, supply, price and quantity axes. Determine the equilibrium price and quantity of sea freight. (2 points) b. The price of sea freight has risen rapidly during the second half of 2020 up until early 2022. This is likely because people consumed goods a lot more after the COVID lockdowns. In your model, illustrate how an increase in consumptions of goods led to the rise in sea freight price during mid-2020 until early 2022. Remember to be specific about how we move from one equilibrium point to another. (10 points) c. Starting from 2022, the sea freight price has fallen steeply. One important reason is that suppliers invested in expanding shipping capacity, which means shipping firms can ship more at every price level. In your supply-demand model, explain the sharp decrease in sea freight price. (8 points)As demand for container space soared during the pandemic, many carriers ploughed money into new ships. Last month the total cargo capacity of vessels on order was equivalent to 30 per cent of the active global fleet, according to Jonathan Roach, analyst at shipping broker Braemar. This compares with 13 per cent in January 2019. Shipping companies have splurged on new vessels Shipping capacity on order as a percentage of the active fleet 25 20 15 5 2019 2020 2021 2023 Shipping capacity round in 307 equivalent units Source Warmar OFT d. Did high inflation in 2022 increase or lower the sea freight price? Why? (10 points)