Answer to Question #174934 in Microeconomics for John

Question

The widespread effects of the Covid-19 pandemic have been devastating and

economically disruptive in South Africa. Covid-19 has defied what is deemed to

be ‘normal’ in terms of conducting business. It is clear that the threat of Covid-

19 has affected the production of many commodities due to the stringent

measures that have been put in place to contain the virus. The soft drink industry

has almost come to a standstill. Most economic and social commentators feel

that the Covid-19 pandemic effect on the economy is going to exacerbate

widespread poverty, in an economy that is already highly unequal, as firms

downsize, and people lose their source of income.

Using two (2) separate graphs, explain how the market for soft drinks

will be affected by the issues mentioned in the case study

Answer 1

In the market for soft drinks the supply of soft drinks will decrease as a result the issues mentioned in the case study, so the equilibrium quantity will decrease and equilibrium price will increase.