Question

Discuss how supply for tour packages are affected by COVID19?

Relate to microeconomics concept.

Answer 1

Before COVID19, the demand and supply of tour packages followed the basic principles of microeconomics.

This implies that in general, the market forces used to decide the price and the quantity supplied of the tour packages.

But in the present scenario, when the world is hit by the COVID119 pandemic, the movement of the people is restricted. Therefore, both the demand and supply of tour packages is zero due to government regulations.

In post-COVID19 scenario, we can assume that the demand for tour packages will experience a fall due to-

i. Lack of affordability due to the current economic crisis

ii. Post-pandemic fear or uncertainity related to health and safety

Similarly, the supply of tour packages will experience a fall due to-

i. Lack of demand

ii. Closing down of service providers due to market speculations and loses.

iii. Government restrictions on movements due to health regulations