Answer to Question #122147 in Microeconomics for Hammad

Question

In light of this report, what inferences can be drawn regarding the price elasticity of hand
sanitizers (For top three and the rest of local brands) before and after COVID-19? What are the
economic consequences for the top three players and the local brands of sanitizers?

Answer 1

Before Covid 19, only top hand sanitizer brands were operating in the market and the rate of competition was low. After Covid 19, more local brands joined the market and the competition became more than before. The price of hand sanitizers rose due to increased demand during the lock-down situation or period.

The economic consequences for both the top three players and local brands are that, there was increased production of hand sanitizers which led to increased profits after Covid 19 compared to the period before Covid 19. The market share for the top players drastically reduced due to the the emergency of local brands which gave them stiff competition and took the share of their market.