Question

Using the economic concepts of Scarcity, Choice, Opportunity, Cost, Demand, Supply, Quantity Demanded, Quantity Supplied and Supply/Demand charts, evaluate the Impact Covid-19 will have on you, a family member of friend under the following conditions:

> There are 145 million people in the workforce. Explain using the Supply/Demand curve. How Covid-19 is affecting the workforce. Is the Demand or Supply curve affected. Which way will the curve shift.

> If you or someone in your household filed a tax return in 2018 or 2019, you will receive approximately $1,200.00. What will you or a family member spend the money on. What do you think other households will spend their money on. What will be the economic impact. How will that affect the Supply/Demand curve.

> Name five areas, sectors and/or industries that are affected by Covid-19. Explain the impact using Supply/Demand curves. Explain which curve is affected and if it shifts to the left or to the right.

> Overall, how is Covid-19 affecting the economy.

Answer 1

1. It is clear that Corona will bring recessionary impacts on world economy overall. It is explained below:

Aggregate demand shifts left as shown on the figure below, average price levels may go down to sell more products but GDP decreases as per monetarists model. Price levels go down from P1 o P2 and GDP goes down from Y1 TO Y2. This also creates more unemployment in an economy.

Fig: AD shifting left.

Price real GDP

Recessionary impact will create microeconomic impact on individual goods and services.

As more people are left out, labor supply increases and demand decreases in short run. Demand shifts left and supply shifts right. This will also decrease wages for the people.

2. Most of the tax return money will be saved as people will be unsure of income in future. If it has to be spent then it will spent on basic needs like food. Demand and supply for for basic goods will increase.

3. Main industries affected are: Negatively affected : Automobiles, textiles, footwear, electronics and petroleum.In these industries supply shifts left.

Positively affected are: Pharmaceuticals, soap and sanitizer makers, medical equipement producers, mask makers, online food providers. In these industries supply shifts right.

3.