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.

Question 1a) Given the above information, how does it affect the Supply of medical equipment to the local market? What would happen to the Supply curve, the equilibrium Price (Pe) and quantity (Qe)? (3 marks) [Answer here]

Answer 1 a) (Type the correct answer)

The Supply curve would shift to left or right; Price up or down; Qty up or down

Question 1b) 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)? (3 marks)

[Answer here]

Answer 1b) (Type the correct answer)

The Demand curve would shift to left or right; Price up or down; Qty up or down

Question 1c) Refer to Question 1a and 1b) 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) (3 marks)

[Answer here]

Answer 1c) [Type the correct answer]

Demand curve shift left or right Supply curve shift left or right; The ultimate change: Equilibrium Price (Pe) up or down or uncertain Equilibrium quantity (Qe) up or down or uncertain

Question 1d) 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. (3 marks)

[Answer here]

Answer 1d)

Type of Market Structure:

Explanation:

Question 1e) Further to Question 1 a) After years of research, development and testing, an overseas medical equipment company has eventually obtained the local governments 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 price and industry output (quantity)?