Since the beginning of 2020, the world is suffering from the pandemic. Due to Covid-19, the...

Since the beginning of 2020, the world is suffering from the pandemic. Due to Covid-19, the demand for surgical masks surges rapidly. Assuming firms that produce surgical masks only need machines that produce surgical masks and workers that operate the machines. What do you think would happen to the equilibrium wage and unemployment, if there is no quarantine in place? And if there is? Assuming we are talking about a small closed economy.

Solutions

Expert Solution

Due to COVID19 pandemic the demand for surgical masks increased with increased restriction like social distancing. The higher demand for the masks will increase the level of production. This will increase the employment rate in the mask making industries. If considering the situation where there is no quarantine takes place, the level of unemployment reduces. The increasing employment rate will increase the demand for labour. This will shift the demand curve to right. The rightward shift of the labour demand curve will increase the wage rate. Without quarantine measures there is an elasticity of supply of labour, there is no limitation to number of labours. This higher level of labour employment will increase the output level also.
Let consider that there is quarantine measures are followed by the labours. This will affect the number of the labours available for the production of mask. The labour supply is inelastic in nature. So the output rise will be less than the given above condition. But the rise of wages will be greater under this situation. Thus the rise in wage rate will not attract the labour market condition and this will be reduces the output level and higher rise in wage.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

On April 4th 2020, Business Line reported that due to the COVID-19 pandemic, the world is...

On April 4th 2020, Business Line reported that due to the COVID-19 pandemic, the world is facing a recession, that economic output is shrinking and growth is sharply lowered. These scenarios are affecting corporate earnings as well as stock prices where prices were sent crashing and investors were left gasping for breath. In response to the COVID-19 pandemic, the Federal government of Malaysia has taken a preventive measure by imposing movement control order (MCO) since March 18th 2020. Given 3...

Covid 19: One of the problems that arises with patients suffering from COVID 19 is due...

Covid 19: One of the problems that arises with patients suffering from COVID 19 is due to accumulation of fluid in their lungs. This makes it very difficult to breathe. You have walked into the emergency room and the interns are arguing about osmosis, diffusion and the symptoms of Covid. One of the interns is arguing that there is no link between the sysmptoms of Covid and osmosis and the other is saying yes there is. Since they know you...

Due to the COVID-19 pandemic, the Federal Government stepped in and legislated in March 2020 to...

Due to the COVID-19 pandemic, the Federal Government stepped in and legislated in March 2020 to temporarily suspend key aspects of insolvent trading law in the Corporations Act 2001 (Cth) for a period of six months. The suspension was recently extended to last until 31 December 2020. In view of these events, do you think that the Federal Government should permanently remove (ie. abolish) Australian insolvent trading law, especially considering that no such equivalent law exists in the United States?...

Supply and Demand: In early 2020 the COVID-19 pandemic swept across the nation and world. In...

Supply and Demand: In early 2020 the COVID-19 pandemic swept across the nation and world. In response, many workers moved from in-person working to remote working. Webcams in particular showed an increase in the amount sold, especially the most well-known and trusted brands. a. Most webcams are produced in China. The US is currently in a trade war with the Chinese which effectively causes additional costs on the production of Chinese goods through tariffs (i.e., taxes). Suppose after the next...

Due to the threat from the COVID-19 pandemic, physical distancing measure was suggested as one of...

Due to the threat from the COVID-19 pandemic, physical distancing measure was suggested as one of how transmission of the disease can be reduced. At Nesto Hypermarket in Muscat, Mr. Ahmed, the recently appointed Retail Manager, is bound to assume his new role. a. What are the major challenges you think will be faced by Mr. Ahmed? Discuss. b. What changes will Mr. Ahmed bring in the retail business and make the customers buy the products? Suggest some promotional strategies...

By now, you know all bout CORONAVIRUS (COVID-19) as a pandemic threat to the world. COVID-19...

By now, you know all bout CORONAVIRUS (COVID-19) as a pandemic threat to the world. COVID-19 has and will have stressful effects on all of us--individually, family,socially, culturally, nationally, economically, technologically, and what not. Given the stressful and dangerous threat, what do you think COVID-19 will have on ECONOMIC manager's decisions--segmentation, product decisions, promotional activities, pricing, supply chain (distribution), and customer relationships. You can use any company that you are familiar with, including the ones you have worked for in...

In this exercise, we focus on the economic impact of the COVID-19 pandemic Due to the...

In this exercise, we focus on the economic impact of the COVID-19 pandemic Due to the COVID-19 pandemic, online teaching becomes a norm in many countries. What are the consequences of students switching to online learning in the following markets? a) (10 points) Laptops. b) (10 points) Classroom equipment (e.g., chairs, desks, whiteboards). There are four markets you need to analyze separately. Assume that each market is perfectly competitive with no frictions (i.e., equilibrium point is reached with no obstacles);...

Corona Virus Disease Pandemic (COVID-19) has a devastated impact on many economies of the world. COVID-19...

Corona Virus Disease Pandemic (COVID-19) has a devastated impact on many economies of the world. COVID-19 is not only a public health and medical issue but also an economic and fiscal matter. Ghana recorded the first case of the virus in March 2020, three months into the implementation of the national budget. Therefore, the cost of fighting the disease is unbudgeted for, which has created a fiscal challenge for the country. The Minister of Finance recently in a statement to...

Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of...

Has the reduction of mobility due to the COVID-19 pandemic increased or reduced the cost of living? According to The New Geography of Jobs, Americans have historically been mobile, continually seeking new opportunities to improve their lives. The COVID-19 pandemic has caused people to remain indoors, and even some States have prevented unnecessary movement of people from one place to another. It is a huge change for many Americans who depend on constant mobility for their economic survival. As such,...

At the moment, we are facing the pandemic of Covid-19. The virus spreads due to people's...

At the moment, we are facing the pandemic of Covid-19. The virus spreads due to people's mobility and the crowd. However, the government plans to conduct the general election on 7 November 2020, and starting from 1 October, each political party and candidate may start the campaign. Now, the problem is as follows: a) each candidate may follow the COVID-19 protocol during the campaign, by doing the campaign via zoom/ google meets (online campaign). They may also do the campaign...

Subjects