Part a)

Under what market structure does the market for hand sanitizers fall into? Justify your answer by referring to the four key characteristics of the relevant market type (6 marks)

Part b)

Let us assume that hand sanitizer sellers in these online market platforms are making a profit in the short-run. Show this situation using a diagram. Consider the entire global market in this case. Now, explain with the help of another diagram the adjustments that may occur in this market in the long-run. (6 marks)

Part c)

Assume now that the costs of shipping are so large that Australian consumers can buy hand sanitizers from only one designated seller in Australia through both ebay and Amazon and there is no possibility of buying hand sanitizers in person in retail stores or any other online platforms. Explain with the help of a diagram whether this seller would be making a profit or a loss in the short run and in the long-run (4 marks)

Part d)

Refer to part C) above; certainly Australian consumers will not be happy buying hand sanitizer from only a designated seller. Briefly explain the possible welfare implication of this situation. Now assume that the Australian government decides to intervene in this market. What possible measures can the government use to improve the welfare of Australian buyers? You should do your own research in answering this question as appropriate. (4 marks)