Question

During a public health crisis like the COVID-19 outbreak, explain why a worker in Hong Kong's restaurant industry may worry more about becoming unemployed, than a worker in the insurance industry. (Think carefully: there is a distinction between changing your status from "working" to "not working", and being unemployed.)

Explain with economics intuition and graph (to enhance analysis)

Answer 1

During a severe health crisis like the COVID-19, the people would be extremely concerned about their health. So, they would not at all prefer to go to restaurants and eat out. They would always try to eat healthy. Hence the demand will decrease to zero. And, due to the decreased demand, the prices would fall down steeply. And hence the restaurant would not be able to survive in tha market. Hence the worker of the restaurant may worry more about becoming unemployed.
On the other hand, if we talk about an insurance industry, than it would rather flourish during this time in two ways:-
A. More and more people would get insurance to insure their life after knowing about the risk for life.
B. As the people die, their nominees will reach the insurance companies to claim their money.

Hence, the worker working in insurance company would never fear loosing his job.

Prices/ Returns restaurant P, anantity DIDI= new demand curre ,