Asso year1 Econ question

Question 1 You were an analyst of a consultancy firm and preparing a market analysis of hard-shell luggage for your client. The following information is collected for the analysis. News Extract 1 Luggage giant Samsonite suffers first-quarter loss of US$787 million as Covid-19 brings global travel to a standstill By South China Morning Post, 15 May 2020 Samsonite International suffered losses of over US$700 million from January to March, and warns coronavirus will hit full-year earnings, as the world's largest suitcase company reels from a pause in global travel. The suitcase brand - which owns the likes of Tumi and American Tourister - recorded a net loss of US$787.3 million in the first three months of 2020, compared to a profit of US$22.8 million in the same period last year. Net sales dropped 27.7 per cent, or US$230 million, over the same time frame, to US$601.2 million. "The near-complete halt in travel and tourism worldwide has adversely affected the group's performance in the first quarter of 2020, and is expected to continue to impact our business for the remainder of 2020," said Kyle Gendreau, chief executive officer, in a statement.... (Source: https://www.scmp.com/business/companies/article/3084507/luggage-giant- samsonites-suffers-first-quarter-loss-us787 and with modifications) News Extract 2 After the first client meeting, you recognize that except travelling trend, market price of Acrylonitrile Butadiene Styrene (ABS) is also an essential information for your analysis, where ABS is the main materials used to manufacture hard-shell luggage. Thus, you refer to the following news extract. Cost Lowered, Inventory Rose, China ABS Market was in Bad Situation By SunSirs, 7 January 2021 The domestic ABS market in December 2020 recorded prices of various brands decreased to a certain extent. As of January 1, 2021, the mainstream offer price of general ABS was about 15,750 yuan / ton, down 18.18% from the beginning of December, 2020. (source: http://www.sunsirs.com/uk/detail_news-4044.html and with modification)(8) lb) (C) N) Consider the information of News Extract 1 only. Use 1 to 2 sentence(s) to summarize the key information before introducing the factor affecting the hard-shell luggage market. Use a demand- and-supply analysis to explain the effect on the equilibrium price and equilibrium quantity of hard-shell luggage. No demand-and-supply diagram is needed but you need to describe how the curve(s) shiftls) in your written explanation. (5 marks) Consider the information of News Extract 2 only. Use 1 to 2 sentence(s) to summarize the key information before introducing the factor affecting the hard-shell luggage market. Use a demand- and-supply analysis to explain the effect on the equilibrium price and equilibrium quantity of hard-shell luggage. No demand-and-supply diagram is needed but you need to describe how the curve(s) shift(s) in your written explanation. (7 marks) Considering all effect identified in your answer of part (a) and (b), what are the combined effect on the equilibrium price and equilibrium quantity of hard-shell luggage? (2 marks) Suppose your client reports there is a drop in quantity sold in the hard-shell luggage market. How could this observation be possible? Explain with ONE demand-and-supply diagram. (6 marks) Questi_onZ Two years ago, Mandy married her husband who is a psychologist. Since then, Mandy has worked as a part-time accountant in a big trading company in Hong Kong. With an hourly rate of $500, she works around 50 hours per month. However, the job is really demanding from Mandy's point of view. At the same time, she is the one in the family to handle all housework. In July 2020, Mandy was suffered from the virus of COVlD-19 and was in hospital for three months. After discharged from the hospital, her health condition is not satisfactory so that she has tried to look for another part time job with lesser pressure. Luckily, she receives a job offer from a small trading company with an hourly rate of $300 and she proposes to work 35 hours per month. She hopes this newjob could provide her more rest time for a faster recovery. In addition, her husband suggests her to hire a domestic helper to take care of her as well as to do the housework at home. After contacted an employment agent, Mandy expects the cost of maintaining a domestic helper is $6,000 per month. Mandy is now considering should she change herjob and hire a domestic helper for 2 years. (a) Define opportunity cost. What is the opportunity cost for Mandy to change herjob and hire a domestic helper for 2 years? Explain. (7 marks) (b) What are the expected benefits for Mandy to change herjob and hire a domestic helper for 2 years? Explain. (4 marks) (c) How could a rational choice be made? Under which TWO situations, Mandy should change her job and hire a domestic helper for 2 years? Explain your answer with simple cost and benefit analysis and support with relevant data. (6 marks) (d) In view of the economic downturn caused by the spread of COVlD-19, Mandy's current employer, the big trading company, closed down before Mandy finalized her decision. Would it change Mandy's opportunity cost and expected benefits of changing her job and hiring a domestic helper for 2 years? Explain. (3 marks) - END OF PAPER