Due to the recent Covid-19 pandemic, people have been buying many supplies in bulk and this has lead to a surge in demand for medical supplies and long life foods, after the initial news and outbreak of the virus, the first item that people lined up for was surgical masks and N95/P2 masks, this massive demand meant that manufacturers of the masks had to work around the clock to keep up with such high demand.
This particularity affects the production possibility curve, where companies have to put more resources into producing masks than into other medical supplies, manufactures are trying to keep up with the high demand but as China continues to quarantine and contain the virus, this means more people have to stay at home rather than go work, this all in all equates to a monstrous demand for surgical masks while supply and resources are quite low.
Another effect of the virus is the mass halting of production and exports from china, this results in an economic slowdown causing the market to plummet.
Apple has decreased iPhone production and the tesla factory in shanghai has seen a complete stop in production, this means that the growth of many companies in china and internationally have seen no economic growth.
The recent events of bulk buying supplies is known as ‘panic buying’ the economic results of panic buying is a higher inflation in product price.
Some forms of panic buying maybe be good, such as a new iPhone release, causing people to camp out in front of stores to purchase their new shiny iPhone, but the current panic buying is very detrimental to everyone in society, the extremely low supply of surgical masks have caused people to purchase specialized N95 and P2 masks, which offer a higher degree of protection but they also cost significantly more than normal masks while also having an even lower supply.
This surge in surgical mask demand has spilled over into demand for more specialized masks, this depletes the already low supply of N95 and P2 masks which are critical for doctors and medical specialists treating the infected, thus this results in a low demand of both types of masks and medical specialists without the proper equipment to treat the sick.
Year 11 MHS Economics 2020 