Daily demand and supply: the market for rhodium

From the WSJ Microeconomics Weekly Review:

World’s Priciest Precious Metal Surges Amid Emissions Clampdown

By Joe Wallace | January 23, 2020

Summary: Because of limited supplies and rising demand, the price of rhodium, a metal used to strip pollutants from automobile exhaust fumes, has surged in 2020. Rhodium is a byproduct of mining for platinum, palladium and gold.

Classroom Application: When demand and supply curves both change in a market, the net effect on equilibrium price and quantity is determined by the direction of each change (increase or decrease) and whether the change in demand is greater or less than the change in supply.

Questions:

1. Draw and label a graph illustrating the demand for and supply of widgets. Assume that there is an increase in both the demand and the supply of widgets. What is the impact of these changes on the equilibrium quantity of widgets? Why is the impact of these changes on the equilibrium price of widgets uncertain?
2. The great British economist, Alfred Marshall (1842-1924) compared the interaction of demand and supply curves to two blades of a pair of scissors. What does this analogy imply about the relative importance of demand and supply in determining prices?Draw and label a graph depicting the demand for and supply of automobiles. Briefly explain the net effect of the following two events on the equilibrium price and equilibrium price of automobiles: (a) an increase in the price of rhodium, and (b) a decrease in the demand for automobiles.
3. In the article, the head of precious-metal trading at a German refiner commented on the recent spike in the price of rhodium: “The situation is driven by a shortage in the market…” Draw and label a graph depicting a shortage in the market for rhodium. Briefly describe how your graph depicts this shortage.
4. Refer to your answer to the previous question. Explain why the following will not change as a result of a shortage of rhodium: demand, supply and the equilibrium price of rhodium.

Here is the link to the article: https://www.wsj.com/articles/worlds-most-expensive-precious-metal-surges-amid-emissions-clampdown-11579780770