Question

In this assignment please relate one of the following economic concepts we have discussed to a personal experience you have had since the COVID-19 pandemic began.

Chapter 1: marginal analysis

Chapter 2: trade off

Chapter 3: a shift in supply and demand

(book: Hubbard and O'Brien 3rd edition Macroeconomics)

Your assignment should explain the concept you chose and how it relates to a personal experience over the past couple weeks. I would recommend your response contain 2-5 paragraphs in to accomplish explaining the concept and your experience.

Answer 1

A Shift in Supply and demand.

Economies around the world have come to a halt. People are not allowed to move outside their houses to maintain social distancing. Shops and factories are closed. Except for a few necessary items like grocery, e-commerce platforms have stopped shipping. Some food delivery is allowed by many people including me have chosen not to buy food from outside to contain the spread of the virus. You can clearly see there is no demand or supply of almost anything. I wanted to buy shoes in April and some shorts too, I was also going to join the gym which would have a multiplier effect on the economy but due to the lockdown, I can't and won't because there is no use and I would rather save some money for what's about to come. You can see here that the demand is reduced a lot from a single person, now this is happening with almost everyone in the economy. Even after this is over, most people will have less money and hence they will buy a lot less too.

My father is a small business owner who also employs 2 people. During the lockdown, there is, of course, no revenue but he has decided to pay 3/4th or 75% of their salary. Now, the income of both, my father and his employees is reduced and after all this is over, he may also have to let one of them go depending on demand. Factories he is taking supplies from are shut, not producing and won't till no one knows. Some countries like the US are issuing stimulus packages that provide almost every household $1200 to stimulate the economy and increase demand and also bailout packages for small and big businesses to increase supply. If governments around the world do not interfere like this, the coming recession will last long.

One small thing that I am going to do after all this is to buy goods locally rather than from an e-commerce platform to stimulate the local economy. My little contribution may not do much but it will certainly help.