Question

Application of the theory:

A real-life situation where you explain the concepts above mentioned responding to the question of how has the coronavirus crisis affected your budget constraint.

• Example/Explanation of personal scarcity and choice(s).
• Example/Explanation of personal opportunity cost due to personal choice(s).
• Example/Explanation of personal expansion or contraction of their budget constraint.
• Conclusion of reflection about the effect of coronavirus on their life.

Answer 1

With the covid 19 pandemic going all over the world it has not only hit the economies badly but also has affected on the individual level as well. With no employment although governments are providing people with necessities it has become very difficult to continue with normal lives. With all of this, the individual budget has also had a hit. With the limited income, the budget has also shinked and has become limited only to buying necessary items for daily use and all of those that are essential for survival. All the luxury items have been sidelined.

Due to this, people have started panic buying which has resulted in shortage of even essential day to day use items and this has lead to an increase in prices of even those. This resulted in scarcity of wheat which has led to the shift to millets consumption.

This choice of millets instead of wheat has an opportunity cost of the health that would have been because of wheat consumption rather than millets.

This has also led to the contraction of the budget constraint as millets is less costly than wheat.

This pandemic has resulted in overall loss of income, shortage of items of daily use and a big hit to economies.

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