Question

1- Write a report about the Impact of Covid19 on two markets of your interest. ANY two markets you choose in ANY country you choose. Two actual markets not hypothetical. Examples for markets; Hand sanitizers, soap, (essential food markets like milk, eggs, meat and bread) cloth, tourism, air flights, public transportation, uber, stock market, fast food markets, etc… 2- For every market, discuss in the report how the changes in the demand determinants and supply determinants affected the demand and the supply. How Covid19 affected the market supply and demand? 3- For every market, discuss how the changes in the supply and demand affected the equilibrium price and quantity. 4- Did the government intervene in any of your markets? How? What is the implication if any? 5- Discuss how the two markets affect each other. Are they complements or substitutes? How the changes that take place in one market affect the other? Note: You don’t have to collect data and numbers. I just need you to talk in wholistic view about the general impact of Covid19 on the two markets that you will choose. You will need to conduct some research though. Below the table some references where you can search for articles about the impact of Covid19 on the markets that might interest you. No graphs, no tables of data are needed for this assignment. Just write consistent and logically valid report.

Answer 1

Hand sanitizers and soap suddenly turned into everyday, every minute handy items which turned necessary all over the world. Consumers tastes and preferences and the need to be safe and healthy became the demand determinants for these products. Demand determinants changed from income and price of the good to a necessity which concerned the health and safety of the individual. Supply determinants also became government and safety regulations which compelled individuals to use these products in public places and at home as frequently as possible. These changes in the determinants led to higher demand and higher supply in order to meet the demand of consumers. Covid19 led to shortage in supply of soaps and sanitisers as all of a sudden consumers started to buy them in bulk, and thus market demand increased exponentially.

Due to decline in supply, meeting the hightened demand expectations, the equilibrium prices moved up as quantity of hand sanitisers and soaps was not able to meet the demand scenarios. Thus, there was lower quantity and higher prices.

The government did intervene in the market by allowing several companies permission through regulatory authority to produce hand sanitizers and soap in bulk quantity. The pressure from the government lead to several companies who were producing in lesser quantities, now producing in bulk in order to address the demand in soaps and sanitizers. This has led to more supply in the market as consumers are stuck at home and rarely refraining to go outside.

Markets are complements as one will need both sanitizers and soaps in order to stay safe. But all in all if consumers are stuck at home, than they would opt to use soaps frequently which will lead to less demand for hand sanitizers.