Question
Home-use antigen test for COVID-19 becomes more popular in Hong Kong in the recent fifth-round outbreak with the Omicron variant. In late February, Hong Kong
Home-use antigen test for COVID-19 becomes more popular in Hong Kong in the recent fifth-round outbreak with the Omicron variant. In late February, Hong Kong government started to recognize a positive result of this type of test as a valid positive. In early April, Hong Kong government gives every household twenty COVID-19 antigen test kits for free. The prices of different brands of COVID19 antigen test kits dropped substantially (some even more than by half) in April. Recently, the Hong Kong government announced that all primary school and secondary school teachers and students are required to take the antigen test before they go to school, starting from late April.
(a) What market structure do you think the home-use COVID-19 antigen test-kits market is the closest to? Do you think the firms producing these kits will make good profit from producing this product in the long run (before people no longer need to use it)? Explain your answers briefly.
(b) If you are a secondary school teacher or student, do you think it is now (April) a good time to buy more COVID-19 test kits for use in the next three months or to buy them later? Do you expect the price to increase or decrease in the next three months based on your prediction of possible development? Explain your rationale.
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