Assume that the locally made medical equipment firm involves extremely high set up costs and has to spend a huge amount on research and development. More importantly, the company has to fulfil the many stringent requirements from the government. Given the unique products, almost every local hospital uses this company in the country.

The local outbreak of coronavirus has put a huge unexpected local demand on locally made medical equipment. Unfortunately, at the same time, the country has also just committed to supply this equipment overseas due to the earlier outbreak of the coronavirus occurring from abroad.

a) Given the above information, how does it affect the Supplyof medical equipment to the local market? What would happen to the Supply curve, the equilibrium Price (Pe) and quantity (Qe)?

b) Given the above information, how does it affect the Demand for medical equipment to the local market? What would happen to the Demand curve, the equilibrium Price (Pe) and quantity (Qe)?

c) Refer to Question a and b) How the simultaneous (concurrent) change in supply and demand affects the ultimate change in equilibrium price (Pe) and quantity (Qe) of the medical equipment market in the country. (hints: Use the Supply / Demand Model)

d) Refer to the paragraph above: What type of market structure is the locally made medical equipment market in the country according to the above information? Explain.

e) Further to Question a) After years of research, development and testing, an overseas medical equipment company has eventually obtained the local government's approval to import and sell their medical equipment in the country. (3 marks)

What is likely to happen to the medical equipment market in the country in terms of priceand industry output (quantity)?