Question

Question 1
Part A
Consider the market for flu vaccinations.
Due to the current coronavirus pandemic, consumers suddenly decide that taking the flu vaccination can reduce the risk of contracting the virus. Predict and explain the effect on the equilibrium price and quantity on the market for flu vaccinations, ceteris paribus.
(2.5 marks, approximately 50-80 words)
Part B
Consider the dairy market.
The Australian government has recently introduced stricter production regulations on milk suppliers to protect consumers from contamination. Predict and explain the impact on the equilibrium price and quantity on the dairy market, ceteris paribus.
(2.5 marks, approximately 50-80 words)

Answer 1

ANS

If the consumers suddenly decide that taking the flu vaccination can reduce the risk of contracting the virus then the price of the vaccination will increase due to the increase in demand and due to this increase in price by the suppliers the profit by selling a vaccine will increase so to fulfill the demand due to which the production of vaccines will increase to and for this suppliers will have to increase the employment to attain the equilibrium .

ANS

The stricter government policy on milk suppliers to protect the consumer from the contamination and because of this strict policy now the production of milk and milk products will be done with more concentration and will consume more time because of whiich the supply of milk will reduce and because of which equilibrium price will increase.