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1. The COVID19 crisis is now evident in the declining supply worldwide and across many markets....

1. The COVID19 crisis is now evident in the declining supply worldwide and across many markets. Discuss the short-run equilibrium efects of this decline in supply on rms operating in perfectly competitive markets by using graphs. Further explain how your answer changes if declining supply is accompanied by a declining demand.

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Ans. A lessening in flexibly would prompt a move in showcase gracefully bend, to one side from S to S', this would prompt increment in cost from P to P' and decline in yield from Q to Q'. This cost will be taken by the individual firm who will build the amount from q to q'.

In any case, on the off chance that request likewise diminishes by a similar sum, at that point request bend movements to one side prompting decline in cost to P and yield further tumbles to Q". The individual firm accepts this cost as given and diminishes the yield to q.

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