Pupils studying economics have discovered that 2020 has provided them with plenty of real-life practical examples. With lockdowns imposed in many countries, cars have remained parked and bus timetables have not operated. The demand curve for petroleum shifted to the left. Consequently oil prices fell to their lowest level for many a year. Yet, the demand curve for flour shifted to the right as consumers confined to their homes, with time on their hands, baked their own bread and cakes. Consumers also increased their demand for equipment required to work at home. Businesses opting to equip their employees with laptops shifted the demand curve to the right. Demand exceeded the supply of printer ink and there were shortages of some ink cartridges. The pandemic also illustrated complementary demand relationships. When consumers feared food shortages, they stockpiled food. As a result of this demand for freezers rose too. Unfortunately, many households suffered reduced income during the pandemic following redundancies and reduced hours. As income fell - and opportunities to eat ot restaurants were reduced - demand for substitute goods such as ramen noodles increased. Inevitably, goods exhibiting extreme income elasticity, where demand rises in proportion to increased income, endured a tough 2020. Suppliers of champagne and luxury cars have seen sales plummet. For details of how we can help your child, please contact Valerie Weston on: Email: valerie.weston@minervatuition.com Phone: +852 6156 5705. We would be delighted to hear from you.
