Suppose the shipping freight and shipbuilding markets are in equilibrium when the International Maritime Organization (IMO) requires the shipping sector to further reduce its emissions of greenhouse gases.

a) Explain how this requirement likely influences shipping freight rates in the short run and in the long run. Make relevant assumption(s) to support your answer if necessary.

b) Explain the impact of the above requirement on the shipbuilding market in the long run by using a two-part diagram showing the connection between the shipping freight and shipbuilding markets