Question

Imagine that there are two markets for meals: sit-down restaurants and restaurants that focus on delivery and to-go meals.

a. Draw a supply-and-demand diagram that shows how the market for sit-down restaurants differs before and after COVID-19. Label each axis, the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity. Then, show how the market for sit-down restaurants differs before and after COVID-19. Label the new equilibrium price and quantity. You can take a picture of your awesome supply and demand diagram and upload it or use software programs to draw your supply and demand diagram. Either way, you'll need to upload your diagram.

b. Draw a supply-and-demand diagram that shows how the market for delivery and to-go meals differs before and after COVID-19. Label each axis, the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity. Then, show the market for delivery and to-go meals differs before and after COVID-19.  Label the new equilibrium price and quantity. You can take a picture of your awesome supply and demand diagram and upload it or use software programs to draw your supply and demand diagram.

c. Compare and contrast your two graphs. Which type of restaurant does well in the new economy? Which does worse? Why?

Answer 1

a.

For sit down restaurants:

The people's cocern about their safety from COVID 19 they want to maintain a particular distance from each other with is not possible if they go to a restaurant and sit their to eat so they avoid Sit down restaurant which cause demand for sit down restaurants to decrease.

Before COVID 19 , DD is the demand curve and SS is the supply curve. E is the equilibrium point where P is equilibrium price and Q is equilibrium quantity.

After COVID 19, demand decreases which cause demand curve to shift left from DD to DD'. New equilibrium will be at point E' where decreased equilibrium quantity is Q' and decreased Price P'

b.

For restaurants that focus on delivery and to-go meals:

To maintain distance people after COVID 19, prefer to takeaway their food from restaurant or get food delievered to their home or at work.

So this will cause increase in demand for this type of restaurant.

Before COVID 19 , DD is the demand curve and SS is the supply curve. E is the equilibrium point where P is equilibrium price and Q is equilibrium quantity.

After COVID 19, demand increases which cause demand curve to shift right from DD to DD'. New equilibrium will be at point E' where increased equilibrium quantity is Q' and increased Price P'.

c.

A sit down restaurant wili do worse after COVID 19 and restaurants who prefers delievery will do good after COVID 19 because as we can observe in the above graphs:

The price and quantity from sit down restaurant decreases which cause its revenue to decrease as wel while on the other hand, the price and quantity for restaurants who prefers delievery increases which cause its revenue to increase as well.