Consider the impact of the Covid-19 pandemic.

a. During the lockdown period, many businesses were not allowed to operate.

Discuss how this can be reflected in the market supply/demand diagram, and what the effect on prices and quantities is likely to be.

Show your answers in a diagram.

b. Looking at costs incurred by firms operating in competitive markets, what is the impact of the pandemic on profit/losses made by firms in the short run? What could happen in the long run?