Attempts to Limit the Spread of Covid-19 - Dramatic Drop of Sales - Economics Assignment Help

Assignment Task :

Question 1. ec

“The UK car market ground to a halt in April, with new vehicle sales plunging by 97% to the lowest level since the end of the Second World War because of the coronavirus lockdown. Just 4,321 new cars were registered last month, after car showrooms were banned from staying open as part of attempts to limit the spread of Covid-19. It compared with 161,064 sales in the same month last year, and was the weakest since 1946 when the UK was emerging from war and resources were still rationed, highlighting the historic extent to which pandemic restrictions have hit the economy.” (The Guardian, 5 May 2020) 

REQUIRED: The outbreak of the pandemic and related lockdown measures resulted in a dramatic drop of sales of cars in many countries in the world. Yet, prices of cars remained relatively stable, at least until the time of writing. Explain why the price of cars did not decline despite the drop of demand. You are required to illustrate your argument by also making use of diagrams (i.e., supply and demand curves). 

Question 2. 

“For better or worse the robots are going to replace many humans in their jobs, analysts say, and the coronavirus outbreak is speeding up the process. ‘People usually say they want a human element to their interactions but Covid-19 has changed that,’ says Martin Ford, a futurist who has written about the ways robots will be integrated into the economy in the coming decades. ‘[Covid-19] is going to change consumer preference and really open up new opportunities for automation.’” (BBC News, 19 April 2020) 

REQUIRED: Explain how investment in automation (AI and robotics) can affect the use of labour in firms and industries. You are required to illustrate your argument by also referring to the role of the marginal rate of technical substitution and by making use of diagrams (i.e., isoquants). 

Question 3. 

“Oil producers without storage space have limited options: sell crude at a loss to those still willing to take it, or shut down oil wells and risk financial ruin. ‘There are no good answers for the industry in a $30-per- barrel environment,’ says Stephen Richardson, an analyst at Evercore ISI. ‘Let’s not fool ourselves: it’s all uneconomic and likely to stay that way.’ (The Guardian, 25 April 2020) 

REQUIRED: The drop of crude oil prices (especially West Texas Intermediate) since March 2020 posed the issue of short-run shutdown for many oil producers in the US. Explain what affects short-run shutdown decisions. You are required to illustrate your argument by also making use of diagrams (i.e., average cost, average variable cost, marginal cost functions). 

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