A few months ago, people were presented and or told about a sickness that could be developing in China. With many people traveling to China from the US, this brought up many concerns. People who did travel to China had a very high risk of having coronavirus when they came back to the US and infecting others without even knowing. People as an effect of this, didn't think much of it, they thought it was just another sick person. But as the months progressed after people were told about the coronavirus, the virus started to show how contagious it was and how people can have it without even knowing it. According to the CDC, as the months went on, the coronavirus became more concerning, as it spread to all 50 states of America. At this point many people are starting to get worried, they are starting to become more cautious about what they buy and where they go to get it. One group of people that is greatly at risk of this virus is “Seniors that are ages 65 and older,” according to the CDC (Centers for Disease Control and Prevention). Seniors are at a very high risk to catch this coronavirus, more than people that are younger, and it means that if someone with the coronavirus is unaware that they have a virus, comes in close contact with a senior, they risk giving the senior the virus and making them sick, or even worse, the senior being unable to live a normal life like he or she used to. Around a month and a half ago, people started responding to the coronavirus. All types of businesses started to either close, and or lay off some employees, and some businesses that are considered essential remained open. With this the president of the United States, Donald Trump, ordered a stay-at-home order for all people in every state in the US, to help slow the spread of the virus in the US.
With the introduction of the coronavirus in the US, many people have started to freak out and stock up on certain goods, more than they used to. Toilet paper, hand sanitizer, wet wipes, and many other sanitary products have seen a major rise in demand. People are in panic and some have started to even hoard some of these products, which retailers try to stop by putting limits on such items. An example as stated above is toilet paper. Toilet paper has been in high demand and according to an article by CBS Newspath on CBS17.com, entitled “Toilet Paper Still in Short Supply as COVID-19 Panic Buying Continues,” stores have very limited amounts of toilet paper because of such high demand, and because of that people are turning to industrial suppliers of toilet paper to get what they need. People aren't just getting more toilet paper because of the panic, they are getting it because they need it. As well as toilet paper, other products have seen an increase in demand such as hand sanitizer, masks, and sanitary products. All of these products also are hard to find at stores because of the demand. According to an article written by Robert Sherman of Fox News entitled, “Over 600 Distilleries, Big and Small, Now Making Hand Sanitizer During Coronavirus Outbreak,” these distilleries which used to make alcohol, are now making hand sanitizer as a response to the coronavirus and a response to the shortage of sanitizer in stores. This shows that this coronavirus isn’t your typical sickness, and people are in panic, with these distilleries making hand sanitizer, the demand for hand sanitizer will be more within reach. People see hand sanitizer as a necessity now, and as an effect that the demand curve for this product and other products will shift up. Aside from the rise of demand, suppliers are trying to keep up and are working extra hard to get consumers what they need to combat current shortages of those products. With all these products being sold, their price is bound to go way up, because they are trending items at this moment. Some people thought through this coronavirus, has lost their jobs, and that leads them to have a decrease in income. This will affect their buying habits as they won't be able to buy as many of the products that they want, such as toilet paper and hand sanitizer, because of the price rising steadily because of the constant demand as an effect of the virus. This decrease in income also affects the products that they before, considered normal goods, but now with having a job, that good is inferior, and they can live without it.
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With the introduction of the coronavirus also, many people have started to become steadily worried about their jobs. While in quarantine and living with the virus, people have experienced a price floor, with people just starting out in the job market and people in the future job market. After the coronavirus, the jobs offered are going to have to have a minimum wage increase in order to restore the market according to Mark Cuban telling Yahoo Finance. This price floor needs to be raised, because if it isn't, then the economy won't be able to return as quickly to its normal state as it was before we were met with the coronavirus. Mark Cuban said, according to Yahoo Finance, “That's what leaders do. You face the circumstances you have, and you deal with it.” This statement is true and most important if we anticipate restoring our economy to its normal, or even better state. Also with the introduction of the coronavirus, people are afraid to go out and buy certain products. Some products customers will pay for regardless of the price such as toilet paper and other sanitary products, because they don't want to run out so they buy as much as they can during this pandemic. With toilet paper and hand sanitizer for example people want it so the demand for these products is high with consumers but supply is having a hard time keeping up. According to an article titled “Walmart CEO Says Stores Having Difficulty Stocking Hand Sanitizer, Toilet Paper” written by Scott Stump from Today, Walmart CEO Doug McMillon says that “Stores have it, and they produce enough products (hand sanitizer, and toilet paper) for each american to have at least one of them.” The problem is that people are stocking up instead of buying the amount they need for a week.
A few months ago, people had their jobs and were living their normal life. In the months following, we became aware of the coronavirus and its place in the economy and society. This virus, being present caused a lot of people to lose their jobs, get laid off, or business closing entirely. This is big, this makes our economy go down and not operate as it normally would. This is seen as a negative externality because with people being fearful of the virus employers are starting to close the business and lay off some employees and it causes those people to lose their income. To combat this externality, after this pandemic is over, businesses are going to need jobs to fill in order to make up for the time when the coronavirus was present, so the people that had jobs before can gain their income back and even new employees. In the midst of this pandemic, there are also positive externalities. Recently many people are starting to wear masks. By wearing these masks, people are slowing the spread of coronavirus in a way, and this benefits everyone and mostly the essential workers in business (doctors, nurses, pharmacy stores, gas stations, grocery stores, and supermarkets). Masks don't stop coronavirus entirely, but they help slow the spread of it, and with social distancing and good hygiene one can do all he or she can to reduce their risk of getting the virus.
Many products are considered necessities to us, some more than others, but with the introduction of the coronavirus in our society we have had some change in demand for certain products. Products include masks, and hand sanitizer for example. For a while these products were elastic and we could live without them before the pandemic. Now that the pandemic is present in our society, these 2 products have changed to inelastic products, where no matter the price the demand for these still remains the same and relatively unchanged. This is because people are scared; they don't want to catch the virus, and with masks and hand sanitizer being products that help prevent the spread, people will want these regardless of the current situation. Costco for example is starting to require the use of face masks in their stores and according to an article titled “Costco to Require Masks for Shoppers to Protect Against Coronavirus,” written by Christine Clarridge of the Seattle Times, Costco is “Allowing only 2 people to enter the store per membership card.” This shows that people need masks and masks are becoming an inelastic good during the coronavirus. The same idea goes for hand sanitizer, people want to reduce some, if not all risk to get the coronavirus, and hand sanitizer is one that people look at as a product that kills germs, and or in this case, kills risk during this situation. In terms of availability of products like masks and hand sanitizer, some convenience stores according to an article written by Sean Szymkowski of Roadshow, “Convenience stores may now advertise bulk items or emphasize cleaning materials and toiletries.” This comes to show that people may consider buying in bulk to get the items they need to prevent the spread, thus satisfying their needs.
Many people before we were met with the virus and all of the things it made us change, were enjoying their normal life. When the virus hit, different businesses reacted differently and similarly. Some businesses had to make the tough decision to lay off a lot of their employees or continue day-to-day operations just online or in person with adjusted safety measures until the situation with the virus goes away. By doing this, this has affected the costs of business differently, based on how they reacted. If the businesses continue to do their day-to-day operations while the virus is still going around, they still have the fixed costs that they have to pay, such as depreciation on products, salaries of the employees, and insurance; it doesn’t change. In terms of variable costs, the businesses still would incur these costs if they produce their own products, such as raw materials used, direct labor used, and manufacturing overhead. If the businesses however laid off their employees their fixed costs would go down in a certain category, being the salaries of the employee. The company would still incur other fixed costs such as insurance, depreciation, and rent. These companies will also, if they produce their products, have variable costs. If the business closed entirely because of the pandemic, it would still need to pay rent, insurance, depreciation, and property taxes. In order to combat this, people need to be asked back to their positions after the virus goes away in order to restore the economy to the way it was before the virus.
For businesses, overcoming competition is key and if you can stand out, you as a business will succeed. For a grocery store mainly, Jewel Osco, they are operating in the market of monopolistic competition. Jewel, they have many competitors during this virus, competitors as Target, Marianos, Fresh Thyme, Tony’s, Costco, and Walmart. All of these stores have some of their own branded products, Jewel has Signature products, Target has Up & Up, and Costco has Kirkland. This comes to show that all of these stores offer similar products but each store has a product that is a little bit different than others offered at other stores. Cookies for example, Jewel might have their own type of cookies, while Costco may have a similar product but package differently. With the virus, grocery stores and supermarkets stay open, and a lot of people go into these stores and buy the products and stock up. It comes down, in this situation with the virus for businesses that fall under monopolistic competition, if you have a product and you offer it at a lower price than your competitors, then people will come to your store more than the others and buy your products during this pandemic because most of the grocery stores and supermarkets remain open to the public. Other businesses in the market will be affected differently during these events at the moment. For example, a business that is classified as an Oligopoly is the market of gas. Gas, before the virus hit, was a necessity, and we needed it for our cars. Now, since we are staying home more, driving isn't needed as much and as an effect of that, gas prices are dropping around America. Jeanette Casselano who is a AAA spokesperson, according to an article written by Kimberly Barker for The Joplin Globe, states that “72% of gas retailers in Joplin, MO are selling unleaded gas for $1.24 or less per gallon.” This is because people while living with this virus, aren’t driving as much and as an effect, not visiting gas stations as much as they used to. In response to this, gas stations are starting to lower prices in hopes of giving consumers motivation to get gas at a very low price, probably the lowest it will ever get in a while.
This pandemic is something we need to evolve with and or adapt to for the time being. Quarantine and staying home are effective ways to stop the spread, but not the complete solution. People are going to have to realize that they are going to have to learn to live with this virus and go about their normal lives with some adjustments. Those adjustments being social distancing, and the use of masks and hand sanitizer. If we want the economy to return to its initial state before the virus, we have to reopen businesses and stop quarantines. If we remain in quarantine for a long period of time, the economy will tank and businesses will go out of business, people will start to either lose their job and their income, and we will be faced with another depression if we remain at home and businesses do not reopen. It is by working together, that we can bring back the economy to its normal state like it was before this pandemic hit.
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