Question
Melbourne is well-known to be a dynamic city with numerous cafes. There has been a lockdown in Melbourne and Victoria due to COVID. Assume that
Melbourne is well-known to be a dynamic city with numerous cafes. There has been a lockdown in Melbourne and Victoria due to COVID. Assume that cafes are in perfect competition in Melbourne and the initial market price of a take-out coffee is 5 dollars. Assume that cafes are authorized to open if they want during the lockdown. Provide a graphical representation of this shock and explain how the lockdown will impact:
a.The supply curve of take-out coffees
b.The demand curve of take-out coffees
c.The equilibrium in the market for take-out coffees
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