Part 1Ed Miliband, if elected in 2015, proposes to introduce a 20-month price freeze for all energy companies. This would result in the big six suppliers being split up, so that their wholesale electricity generation activities could be separated from their retail supply activities. This law will, however, have implications for both suppliers and consumers, in the short and long term. There is currently excess demand, that is, the quantity demanded exceeds the quantity supplied, because the equilibrium is high. The equilibrium price of a product is determined at the intersection of the market demand curve and the product's supply curve. (Salvatore, 2007)Therefore, excess demand will cause suppliers to increase their prices, so demand will decrease in order to make profits, but this cannot happen during the price freeze because there will be no no balance. In short in the long term, there will be no change in either demand or supply as the government will set a maximum price lower than the existing equilibrium and enter into a market imbalance. Since the equilibrium price will be lower, suppliers will have to reduce their production, causing the supply curve to shift downward. Since production will be less, consumers will have to restrict their demand, causing the demand curve to move downward. (Salvatore, 2007) This will also affect suppliers and consumers. Suppliers will not make excessive profits since demand will not change and consumers will be affected by power outages and electricity shortages. Demand will therefore be inelastic since there will be little response in 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. Legal regulations play a crucial factor in business and, in general, a company must establish a relationship of trust by taking into account 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) Concerning the big six energy companies, as shown in the above statements Even though they are legally avoiding paying taxes, it is obvious that an unethical business position is being used since they are facing a principal-agent problem. Managers are more interested in maximizing their profits rather than maximizing their company's profits, which is the exact opposite of business ethics. (Salvatore, 2007)