Question

Question 3:

Now analyze the impact of the emergence of the coronavirus (Covid-19). Assume the epidemic significantly reduces the demand for meat only and that there are no changes to the supply of meat.

• On the same graph you produced in Question 1, graphically depict any changes in the marketplace and any changes that impact the individual firm.
• Show the movements of the curves (if any) and the new Short Run Equilibrium (SRE).
• Indicate the new market equilibrium P₁ and Q₁, the optimal output of an individual firm representative of the other firms in the industry at this SRE (labeled as q₁), and the individual firm’s profit, if any (shaded and clearly labeled).
• Provide a brief narrative explaining the movements and the resulting change in an individual firm’s profit, if any. Please make sure you address the changes in the market equilibrium quantity Q, market price P, and the individual firm’s profit maximizing quantity q, if any.
• Reminder: be sure to label all relevant points and axes.

Answer 1