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With the outbreak of COVID-19, many people in Hong Kong choose cooking at home instead of...

With the outbreak of COVID-19, many people in Hong Kong choose cooking at home instead of dining out to reduce the chance of contacting Coronavirus. At the same time, it is observed that many restaurants have closed down. Given that many restaurants cut their menu prices in this period, explain, with the aid of a supply-and-demand diagram, how the above changes affect the market for dining out meals in restaurants.

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Answer - As a result of lesser number of people preferring to go out , the demand for the restaurant food will decrease as more people prefer to cook at home. This will shift the demand curve to left.

On the other hand , the lesser customers , decrease in the menu prices , will lead to decrease in supply and supply curve will shift to left. Both these will lead to the no change in price but the quantity will decrease from Q to Q1 and shift in left direction.

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