Question

Question 1. The Covid-19 pandemic in early March has resulted in shortages of toilet paper, rice, flour, pasta and many other household items, and it took some time before supermarket shelves returned to normal. Explain why there were shortages of these products using demand and supply. You can pick one particular item or more to explain your answer. Explain with diagram.

Answer 1

The pandemic in early March created a panic situation among consumers. They feared that there would be shortage of goods in the following months so they began hoarding items like toilet paper, rice and pulses. This led to an increase in demand for all these goods. Globally consumers were hoarding all essentials which created the spike in demand. This is depicted in the graph with the new demand curve.

Along with this the supply chain was also disrupted. Initially there was a lot of stress on the supply chain to stock the essentials in supermarkets to meet the increased demand. But eventually the stockpiling behavior disappeared and the supply was able to meet the increased demand.