Part 1Ed Miliband, if elected in 2015, is proposing to introduce a 20-month price freeze on all energy companies. This will involve breaking up the big six suppliers so that their wholesale power generation businesses can be separated from their retail supply businesses. This act, however, will have implications on both suppliers and consumers, in the short term and long term. There is currently excess demand, meaning that the quantity demanded exceeds the quantity supplied, due to the equilibrium being high. The equilibrium price of a product is determined at the intersection of the market demand curve and the market supply curve of the product. (Salvatore, 2007) Therefore excess demand will lead suppliers to increase prices so that demand will decrease to make profits but this could not happen during the price freeze because there will be no equilibrium. In the short term Over the period there will be no shift in either demand or supply because the government will set a maximum price below the existing equilibrium and enter a market imbalance. Since the equilibrium price will be lower, suppliers will have to reduce their production and this will result in a downward movement on the supply curve. Since production will be less, consumers will have to limit demand and this will result in a downward movement on the demand curve. (Salvatore, 2007)This will affect both suppliers and consumers. Suppliers will not make excessive profits as demand will not change and consumers will be hit by blackouts and energy shortages. Demand will therefore be inelastic since there will be little response in terms of quantity demanded to a change in price. However...... middle of paper ....../bonus-executive-pay-energy-firms) Business ethics are moral principles about how a business should behave. Laws play a crucial factor in business and in general a company should establish trust by taking into consideration the needs of stakeholders, shareholders and the government. (http://businesscasestudies.co.uk/anglo-american/business-ethics-and-corporate-social-responsibility/what-are-business-ethics.html#ixzz2z4gH4Vl9) Regarding the big six energy companies as seen in the above statements, even if they legally avoid paying taxes, it is evident that an unethical business position is being used since they face a principal-agent problem. Managers are more interested in maximizing their own benefits rather than maximizing their company's profits and this is exactly the opposite of business ethics. (Savior, 2007)