Answer to Question #282129 in Microeconomics for Looney

Question

Food delivery is not a new trend of business, but it becomes newly important when Movement Control Order (MCO) was implemented since March last year in Malaysia. Discuss how the implementation of MCO affect the demand of food delivery in the market (support your answers with a diagram). What do you think is the elasticity of demand for food delivery during the MCO period? Give your reason. If the food delivery company would like to increase the revenue during the MCO period, explain what can the company do with the delivery charges?

Answer 1

MCO has put enormous strains on food supply chains, resulting in bottlenecks in farm labor, processing, transportation, and logistics, as well as significant fluctuations in demand. In the face of these challenges, food supply chains have shown amazing resilience. As stockpiling behavior faded and supply networks adjusted to growing demand, grocery store shelves were restocked over time. Long lineups at the border dwindled swiftly as a result of efforts aimed at removing superfluous barriers. The greatest threat to food security is not a lack of food, but rather a lack of access to food by consumers: safety nets are required to avoid an increase in hunger and food insecurity. The importance of an open and predictable international trading environment, which allows enterprises to tap into new sources of supply when traditional ones are compromised, has been highlighted by the swift responsiveness of food supply chains.

Yet, at least in the developed world, what is astonishing is the rapidity with which supply chain actors have been able to reorganize themselves to assure the continuous availability of food. The importance of an open and predictable international trading environment, which allows enterprises to tap into new sources of supply when traditional ones are compromised, has been highlighted by the swift responsiveness of food supply chains. Policymakers have also mainly avoided the mistakes made during the food price crisis, and have taken a variety of other efforts to guarantee that food supply systems continue to function. Because health services are less generally available, informal work is common, logistics systems are less built, and farming is more labor intensive, it appears that food supply chains in underdeveloped nations will be hurt harder.