Question

1. Changes in consumer demands for household cleaning products have been caused by the coronavirus pandemic. How would the demand curve for these products change as a result of the pandemic? How would the supply curve shift in response to change in demand?
2. What would happen if new cleaning firms entered the market. How will this affect the demand and supply curve?
3. How does reducing the number of brands of cleaning products in a firm result in greater efficiency?

Answer 1

Answer - The demand for the products related with house cleaning has increased due to corona virus . Thus , the demand curve has shifted to right indicating the increased demand. Many companies are coming up for the production of these cleaning products as they see profit earning prospects here. Thus the supply will increase and supply curve should shift right. The coming of the new firms in market will make the demand more elastic , but not change market demand. The supply will increase as a result of increased sellers. Hence the supply curve will shift right.

The variety of brands keeps the scope for the price discrimination. The lesser brands will help to maintain the uniform price , the constant price will ensure greater efficiency which will be obtained by lesser price discrimination and product differentiation.