Question 1:

Hong Kong's embattled leader on Wednesday unveiled her government's biggest coronavirus financial relief package so far, offering a HK$137.5 billion (US$18 billion) lifeline to save ailing businesses and ensure some 1.5 million workers would continue to get paid in the tough months ahead

The government would, through employers, pay 50 per cent of salaries for half a year, each worker's monthly subsidy capped at HK$9,000

Many small businesses are seriously affected by the Coronavirus. For example, some Chinese restaurants revealed that they might close their business in next few months. 1 Coronavirus: Carrie Lam unveils Hong Kong's biggest Covid 19 relief package yet, worth HK$138 billion, to ensure 1.5 million workers still get paid.

a) Starting

with long run equilibrium, show how small business are affected by the Coronavirus.

Explain with aid of diagram.

b) The Hong Kong government proposed to subsidize the salaries of business. Discuss why

some small business still decide to close in

short run. Explain with aid of diagram.