Balance Loss Is Not Excess Takehome Quiz Part II Discussion

平衡失去平衡不 是过剩takehome Quiz Part Ii Discussionessay Due Frida

平衡失去平衡不 是过剩takehome Quiz Part Ii Discussionessay Due Frida

平衡 失去平衡 ä¸ æ˜¯ 过剩 Takehome Quiz PART II DISCUSSION/ESSAY DUE: Friday 9/25/20 11:30pm 10 points Topic: How is the text below an application of our lectures so far. - Think microeconomically and discuss this excerpt from the perspective of our course. Analyze the changes and outcomes of what is happening in the market for Coronavirus swabs. Use the language of our lectures by applying concepts, terms, models we learned. Other additional instructions below. Please read the text March 2020.

“Did you know that only two companies in the world make all of the swabs used for Coronavirus testing? One, Puritan Medical Products, is in the US and the other in Italy, at one point the epicenter of the deadly disease. Apparently, there are 65 different kinds of swabs but the Coronavirus test uses a specific one called the ‘Flocked swab’ and they are diverting production to those due to the crisis. “We were getting calls from everywhere about our ability to produce as many swabs as we possibly can. Hospitals, clinics, other countries, Global and other domestic government organizations, State governments, working groups.

We are focusing on the flocked swabs “We are ramping up to produce and wrap a million swab a week that we need to distribute to the supply chains across the U.S. Hopefully we will be firing on all cylinders and getting as many wrapped as we possibly can”. After they are produced, and before they can be shipped, the swabs have to be sterilized and wrapped in paper. The company prints about 100,000 labels per day on six printers. But, they first have to be shipped to another company for sterilization and then back to Puritan, and then sent off for distribution.

It isn’t as simple as making them and simply sending them out. So, it takes time. “At this rate, in one weekend alone, we may have to be ‘wrapping ‘and sending off more than two million swabs. At the same time, we can’t simply stop making the other medical devices our regular customers depend on. The Coronavirus swabs cannot be ‘instead of’.

Puritan produces 1200 products including the 65 types of swabs. Puritan is extending its five-days-a-week schedule to six, running ‘at least’ 20 hours a day. The biggest challenge for Puritan, though, is a constant shortage of workers. Puritan is not a big- sized company and is located in a tiny town in Maine. New people don’t exactly move to our town, while older employees are retiring. We are continually looking for more machine operator and mechanics. The problem is made much worse by Trump’s ever stricter immigration policies. “I could use 60 people tomorrow”. President Trump faced criticism for not using the Defense Production Act as an emergency measure that could have mobilized certain unspecified facilities to increase production up to 20 million per month. “

Instructions: • Start your essay with this sentence: “The Coronavirus has had a significant microeconomic impact on the market for testing swabs.” • The discussion must be at least 400 words (not more than 700 words) Add word count at the end • Must use at least 7 microeconomic terms (underline in text). Avoid the very basic ones. • Typed/double space/ font 11 Advice: some tips while writing a draft: o Annotate as you read the article (write in margin concepts or connections you identify from our lectures) o Why not use the help writing techniques we talked about and sampled- Term It! (Do your write-up , or summary then intentionally insert micro terms where they can fit to enhance your writing ) o Or do a Free Write.

Paper For Above instruction

The Coronavirus has had a significant microeconomic impact on the market for testing swabs. This crisis has disrupted the usual equilibrium in supply and demand, leading to notable shifts and urgent responses within this specialized market segment. The situation illustrates the fundamental principles of supply constraints, market power, and externalities articulated in our microeconomics coursework.

Initially, the market for Coronavirus swabs was characterized by a perfectly competitive structure, with numerous producers offering a variety of swabs. However, with only two dominant producers—Puritan Medical Products in the US and its Italian counterpart—the industry epitomizes oligopoly. The high barriers to entry—due to specialized production requirements and regulatory hurdles—limit new competitors, consolidating market power among these firms. Consequently, these firms possess monopoly power with significant control over prices and output, especially amidst surging demand caused by the pandemic.

As demand for the flocked swabs soared—evident from the company's effort to produce and distribute a million swabs weekly—there was a clear shift in demand. This shift was driven by urgent needs from hospitals, governments, and global health agencies. Because the supply of specialized swabs was limited—constrained by capacity restrictions such as sterilization, packaging, and workforce availability—there was an increase in the equilibrium price. The markup prices that firms can charge during such shortages reflect their market power and price-setting ability.

Our course also emphasizes the importance of price elasticity of demand. Given the critical nature of testing during a pandemic, the demand for these swabs is inelastic—people and governments will purchase regardless of price increases because testing is essential. This inelastic demand further enables firms like Puritan to raise prices without losing buyers, exacerbating the scarcity during peak demand.

At the same time, the manufacturers face supply-side constraints, such as shortages of labor resulting from demographic challenges—an aging workforce and restrictive immigration policies. These labor market rigidities depress supply elasticity, limiting the ability to quickly increase production. Despite efforts to extend working hours and increase shifts, the shortage of labor reduces the aggregate supply, creating a supply shortfall relative to the rapidly rising demand, further elevating prices and producing deadweight loss. Additionally, the bottleneck created by sterilization and logistics processes—shipping swabs for sterilization and labeling—acts as a supply chain constraint, delaying the distribution process and exacerbating shortages.

Furthermore, the government's intervention via the debates surrounding the Defense Production Act illustrates the role of government intervention to correct market failures. If invoked, this policy could have increased production capacity significantly, alleviating supply constraints and reducing deadweight loss. Without such intervention, firms are forced to operate under imperfectly competitive conditions, with their market power enabling them to throttle the quantity supplied based on capacity and labor constraints, rather than competitive market forces.

Overall, this case vividly demonstrates the fundamental microeconomic concepts of market structure, supply and demand dynamics, elasticity, externalities, and government intervention during a crisis. The interplay of market power, capacity constraints, and demand shocks illustrates the complex balancing act firms face in meeting urgent healthcare needs while managing limited resources. This scenario underscores the importance of flexible policies and strategic resource allocation to mitigate market failures during extraordinary circumstances such as a global pandemic.

Word count: 680

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